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Confusion Reigns as Home Values Fluctuate Regionally; Northeastern Homeowners Overly Cynical About Home Values, But Western Homeowners Are Too Confident

Homeowners Across the Country Predict a Full Recovery in Next Six Months, According to Zillow® Q3 Homeowner Confidence Survey

Nov 18, 2009




SEATTLE, Nov. 18 /PRNewswire/ -- Homeowner confidence was all over the map in the third quarter, as home values in some parts of the country stabilized while other areas saw continuing declines. Homeowners in the Northeast were the most cynical about their own homes' values over the past 12 months, although the region posted the highest percentage of homes increasing in value during that same time period, according to the Zillow Q3 Homeowner Confidence Survey(1) and the Zillow Q3 Real Estate Market Reports.




One in five (20 percent) Northeastern homeowners believes their own home gained value in the past 12 months, according to the survey. But in reality, 31 percent of homes in the region increased in value, according to the Zillow Q3 Real Estate Market Reports.


That translates to a Zillow Home Value Misperception Index(2) of -6, which means Northeastern homeowners believe values performed worse than they did in reality - a first in Homeowner Confidence Survey(3) history. A Misperception Index of 0 would mean homeowners' perceptions were in line with reality.


Homeowners in the West were the least realistic in the country, with 28 percent believing their own homes' values increased in the past 12 months. According to Zillow, 17 percent of homes in the region actually increased, resulting in a Misperception Index of 17.


The Midwest had a Misperception Index of 8, while the South had an Index of 15.


Nationally, 25 percent of homeowners believe their own home's value increased in the last 12 months. In reality, 22 percent of U.S. homes gained value. But fewer than half (49 percent) believe their home's value decreased over the past 12 months, while 72 percent actually decreased. That discrepancy between perception and reality resulted in a Misperception Index of 10.


U.S. homeowners were also more optimistic about the future of their own homes' values than at any time in the past six quarters. Two in five (41 percent) say their own home's value will increase in the next six months. An additional 43 percent say their home's value will remain the same, with only 17 percent saying their home's value will decrease.


"Homeowners are clearly confused about the housing market, and with good reason," said Zillow Chief Economist Stan Humphries. "Home values in different parts of the country have shown varied performance in the third quarter. In the Northeast, they have shown significant stabilization. In the Boston metro area, values are even up from this time last year. That gives Northeastern homeowners a negative Misperception Index in the third quarter, the first time we've seen this.


"But across the rest of the country, homeowners are holding onto the hope that home values have performed better than they have in reality. Consistent with all previous surveys, homeowners also seem to be overly optimistic about future home values. While we have definitely seen some stabilization in recent months, there is a high likelihood that home values will see further declines driven by an increasing number of foreclosures coming into the market and, possibly, rising interest rates after the first quarter of next year. The homebuyer tax credits have the potential to stimulate demand and bring about a bottom sooner but, even so, we are very likely to see a sustained period of negligible appreciation in real terms. It seems that homeowners are still working under the assumption of a V-shaped recovery to home values when a long, L-shaped recovery is more likely."


    Homeowner Perception by Region
      Homeowner Perception of Home
      Value Change in Past Year by     US Q3
                Region                  2009   Northeast  Midwest  South  West
      ----------------------------      ----   ---------  -------  -----  ----

    My Home's Value Has Decreased        49%      51%       52%     45%    53%
    -----------------------------        --       --        --      --     --
    My Home's Value Has Stayed the Same  26%      29%       25%     28%    19%
    -----------------------------------  --       --        --      --     --
    My Home's Value Has Increased        25%      20%       23%     27%    28%
    -----------------------------        --       --        --      --     --
    Market Reality: Homes Reporting Year-over-Year Value Changes in Q3,
     according to Zillow
    Actual Percent of Homes that
     Decreased                           72%      61%       72%     73%    78%
    ----------------------------         --       --        --      --     --
    Actual Percent of Homes that
     Stayed the Same (+/-1%)              6%       8%        6%      6%     5%
    ----------------------------          -        -         -       -      -
    Actual Percent of Homes that
     Increased                           22%      31%       22%     22%    17%
    ----------------------------         --       --        --      --     --
    Q3 2009 Home Value
     Misperception Index                 10       -6         8      15     17
    --------------------                 --       --         -      --     --
    Q2 2009 Home Value
     Misperception Index                 13       10        10      18      7
    --------------------                 --       --        --      --      -
    Q3 2008 Home Value
     Misperception Index                 16       20        15      13     13
    --------------------                 --       --        --      --     --
    Homeowner Perception of Own Home's Value in Next Six Months
    My Home's Value Will Decrease        17%      17%       18%     16%    15%
    -----------------------------        --       --        --      --     --
    My Home's Value Will Stay the Same   43%      44%       38%     44%    44%
    ----------------------------------   --       --        --      --     --
    My Home's Value Will Increase        41%      40%       43%     39%    41%
    -----------------------------        --       --        --      --     --

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


Pent-up Supply Steady at Nearly One-Third of Homeowners Who May Sell

The level of pent-up supply - a component of "shadow inventory" -- remained relatively steady from the second quarter to the third. Nearly one-third (31 percent) of homeowners indicated they would be at least somewhat likely to put their home up for sale in the next 12 months if they signs of a real estate market turnaround(4). That is up slightly from 29 percent in Q2. Homeowners said that hearing more general good news about the economy (45 percent), the ability to sell their home for more than they paid for it (43 percent) and evidence of increasing home sales in the local market (43 percent) would be the primary indicators of a real estate turn around.


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


(1) The survey was conducted online by Harris Interactive within the United States on behalf of between October 6 and October 8, 2009 among 2,081 adults ages 18+, of whom 1,471 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. 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.

(2) 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 Q3 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 Q3 data is based on analysis of Q3 Real Estate Market Reports.

(3) The Zillow Homeowner Confidence Survey was first fielded in Q2 2008.

(4) 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 892 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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