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Optimism Grips Homeowners: 81% Think Home's Value Will Increase or Stay Same in Next 6 Months, But More Than Half Believe Home's Value Decreased in Past Year

'Shadow Inventory' Stays Steady; 29 Percent At Least Somewhat Likely to Put Home on Market With Signs of Market Turnaround, According to Zillow®Q2 Homeowner Confidence Survey

Quick Facts:

-- Sixty percent of all homeowners believe their own home lost value over the past 12 months; in reality 83 percent of U.S. homes declined in value.

-- Eighty-one percent of homeowners believe their own homes' values will not decline over the next six months.

-- Homeowners in the South are the least realistic about their own homes' values, while homeowners in the West are the most realistic.

Aug 18, 2009

SEATTLE, Aug. 18 /PRNewswire/ -- American homeowners are much more realistic about their own homes' values than they were one year ago, but are more optimistic about the future than at any other time in the past year. More than half (60 percent) of homeowners believe their own home lost value in the past 12 months, according to the Zillow Q2 Homeowner Confidence Survey(i). In reality, 83 percent of homes lost value during that time, according to Zillow's second quarter Real Estate Market Reports.


But homeowners are more optimistic than ever about the future values of their homes, with 81 percent of homeowners believing their own homes' values will not decline in the next six months - the highest percentage on record since the first quarterly Homeowner Confidence Survey, which was fielded in the second quarter of 2008. Meanwhile, only 19 percent of homeowners believe their own home will decrease in value over the next six months.

Homeowners' relatively more realistic perceptions of home values over the last 12 months resulted in a Zillow Home Value Misperception Index(ii) of 13 (an Index value of zero would mean homeowners' perceptions were in line with reality), down significantly from a Misperception Index of 32 one year ago.

Although homeowner perception in the second quarter shifted closer to reality when compared to 12 months ago, the Misperception Index rose from six in the first quarter. In both Q1 and Q2, 60 percent of homeowners said their home had declined in value over the past year. But with 83 percent of homes actually losing value in the second quarter compared with 81 percent in the first quarter, the gap between perception and reality increased.

The survey also indicated that many homeowners could be waiting on the sidelines to sell. When asked about future plans to sell, 29 percent of homeowners said they would be at least "somewhat likely" to put their homes on the market in the next 12 months if they saw signs of a real estate market turnaround, creating "shadow inventory" that could slow a recovery(iii).

"Hope springs eternal for the U.S. homeowner," said Dr. Stan Humphries, Zillow chief economist. "While their perceptions of past declines in their homes' values have gotten more realistic over the past year, each quarter homeowners express the opinion that the worst is behind them. Unfortunately, that has not been the case thus far and it's far from clear that it's the case today. Despite some signs of slowing depreciation in many markets in the second quarter - the height of the 2009 home-buying season - there are many market fundamentals that will challenge home prices in the near-term: high for-sale inventory levels, foreclosures, negative equity, and price-to-rent ratios that still aren't back to historical levels yet."

    Homeowner Perception by Region

    Homeowner Perception of
     Home Value Change in               US Q2
     Past Year by Region                 2009  Northeast  Midwest  South  West

    My Home's Value Has Decreased         60%     56%       62%      52%   73%
    My Home's Value Has Stayed
     the Same                             19%     21%       20%      21%   13%
    My Home's Value Has Increased         22%     23%       18%      27%   14%

    Market Reality: Homes Reporting Year-over-Year Value Changes in Q2,
     according to Zillow

    Actual Percent of Homes that
     Decreased                            83%     77%       84%      80%   89%
    Actual Percent of Homes that Stayed
     the Same (+/-1%)                      4%      5%        4%       4%    2%
    Actual Percent of Homes that
     Increased                            13%     18%       12%      16%    8%
    Q2 2009 Home Value Misperception
     Index                                13      10        10       18     7
    Q1 2009 Home Value Misperception
     Index                                 6      12         3        8     3
    Q2 2008 Home Value Misperception
     Index                                32      29        31       36    12

    Homeowner Perception of Own Home's Value
     in Next Six Months

    My Home's Value Will Decrease         19%     17%       25%      17%   19%
    My Home's Value Will Stay the Same    47%     44%       47%      45%   51%
    My Home's Value Will Increase         34%     38%       27%      38%   30%

    (NOTE: Column percentages may not total 100 percent due to rounding)

Homeowners in the West are again the most realistic about their own homes' values, with a Misperception Index of seven, but 81 percent of them believe their homes' values will increase or stay the same in the coming six months. Southerners were farthest from reality, with a Misperception Index of 18, and were even more optimistic about the future of their homes' values, with 83 percent saying their homes' values would increase or remain the same.

Recent home sales no longer the primary indicator of a real estate turnaround

Homeowners who are at least somewhat likely to put their home up for sale in the next year said improved local employment statistics will be a primary indicator of a real estate turnaround (63 percent), a change from last quarter when most homeowners said that increasing home sales would indicate a turnaround. Recently reported statistics from the U.S. Department of Labor and Statistics show unemployment at 9.4 percent nationally in July compared to 9.5 percent in June.

For full survey results or more information, please visit the Zillow press room at, or email

About® is an online real estate marketplace where homeowners, buyers, sellers, real estate agents and mortgage professionals find and share vital information about homes and mortgages, for free. Launched in early 2006 with Zestimate® home values and data on millions of U.S. homes, Zillow has since added homes for sale, a directory of real estate and lending professionals, Zillow Advice and Zillow Mortgage Marketplace. One of the most-visited U.S. real estate Web sites, with more than eight million unique visitors per month, Zillow's goal is to help people become smarter about real estate in every stage of the home ownership process--home buying, selling, remodeling and financing. The company is headquartered in Seattle and has raised $87 million in funding.

About Harris Interactive

Harris Interactive is a global leader in custom market research. With a long and rich history in multimodal research that is powered by our science and technology, we assist clients in achieving business results. Harris Interactive serves clients globally through our North American, European and Asian offices and a network of independent market research firms. For more information, please visit, Zillow and Zestimate are registered trademarks of Zillow, Inc. Harris Interactive is a registered trademark of Harris Interactive Inc

(i) The survey was conducted online by Harris Interactive within the United States on behalf of between July 7 and July 9, 2009 among 2,258 adults ages 18+, of whom 1,600 are homeowners. Unless otherwise indicated, all percentages are based out of homeowners who think the value of their home has increased, decreased or remained the same since this time last year. Percentages have been recalculated to exclude "not sure" or "don't know" and/or not applicable responses, and to exclude homeowners who already had their home for sale. This online survey is not based on a probability sample and therefore no estimates of theoretical sampling error can be calculated. A full methodology, including weighting variables, is available.

(ii) Zillow Home Value Misperception Index measures the gap between homeowner perception of changes in their home's value, and actual home value changes. The Misperception Index is calculated from an adjusted base of homeowners who think their home value changed - increased or decreased - and excludes "not sure" AND "remained the same" responses. The Index is the difference between those who think their home's value increased (27% adjusted, from Survey) and the percent of U.S. homes that actually increased (15% adjusted, Zillow Q1 data) in value year-over-year on an adjusted base of home values that changed by more or less than one percent (excludes homes that remained the same within one percent). Zillow Q2 data is based on analysis of Q2 Real Estate Market Reports.

(iii) The results for the question "If you saw signs of a real estate market turnaround in the next 12 months, how likely would you be to put your home up for sale?," were taken from a base of 924 homeowners who indicated some degree of likelihood to put their home up for sale in the next 12 months, if not already up for sale and if the real estate market turns around.


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