Home owners are quite aware of the slow housing market, but most of them don’t think the trend is affecting their property, according to recent survey of 1,361 home owners.
Harris Interactive conducted the Homeowner Confidence Survey on behalf of real estate Web site Zillow. Results show that nearly two out of three (62 percent) home owners think their home value has increased or remained the same in the past year.
However, 77 percent of U.S. homes lost value in the past 12 months, according to preliminary analysis of Zillow's Q2 Real Estate Market Reports, due to be released August 12. Only 19 percent of homes increased in value, and 5 percent remained the same.
Another interesting finding from the survey: Home owner’s optimism about real estate prices doesn't extend to neighboring homes, as 42 percent expect values in their local market to drop and 58 percent think values will increase or remain the same.
The survey underscores a wide gap between home owners' inflated perception of their home values and the market reality. To monitor this perception-reality gap over time, Zillow has created the Home Value Misperception Index, which is the difference between the adjusted percentage of home owners who believe their home value increased over the past year and the adjusted percentage of homes that have increased in value.
Nationwide, the second quarter Home Value Misperception Index is 32, reflecting this broad gap. Those in the West, which has the highest proportion of homes (88%) that declined in value during the quarter, seem to have the best grasp on reality with a Misperception Index of 23, while those in the South have the widest gap at 36.
“We attribute this gap to a combination of inattention and a fair bit of denial that causes people to believe their home is insulated from the woes of the market that affect others, but not them," said Dr. Stan Humphries, Zillow vice president of data and analytics.
Source: Zillow
This article is from Realtor Magazine Daily Real Estate News for August 8, 2008
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