Most American homeowners believe their home's value has declined over the past year, but a majority also think a bottom has been reached, real estate website Zillow.com said.
A majority, or 60%, believe their home lost value during the past 12 months, according to the Zillow Q1 Homeowner Confidence Survey.
In reality, 80% of homes across the country lost value during the past 12 months, according to Zillow's first-quarter Real Estate Market Reports.
Additionally, 18% believe their home gained value in the past 12 months, and 22% believe its value remained the same, according to the survey.
That resulted in a Zillow Home Value Misperception Index of five - the lowest it has been since Zillow introduced the index in the second quarter of 2008 and down from 10 in the fourth quarter of 2008. A Misperception Index of zero would mean homeowners perceptions' were in line with actual values.
“The perception of American homeowners is finally catching up to reality, which is that 80% of all homes in the country lost value during this past year,” Dr. Stan Humphries, Zillow's vice president of data and analytics, said in a statement accompanying the survey.
“While homeowners are now more realistic when looking backward, they are still pretty starry-eyed when looking forward, with three out of four homeowners believing that their own homes' prices will increase or be flat over the next six months. Unfortunately, there are few markets we expect to perform this well,” he said.
Most homeowners - 74% - believe their home will not decline in value in the coming six months, effectively calling a bottom to their own home's housing slide, Zillow said.
Specifically, one in four homeowners, or 27%, think their home's value will increase in the next six months, while nearly half, or 47%, believe its value will remain the same. Homeowners were similarly optimistic when it came to predicting home values in their local markets, the survey showed.
About two-thirds of homeowners believe home values in their local markets will increase or stay the same, at 26% and 37% respectively, over the next six months. 37% believe home values will decrease, the survey showed.
It also showed a significant number of potential sellers are holding back due to the current market. When asked about future plans to sell, 31% 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, the survey showed.
“Also interesting is the information we have for the first time this quarter on the levels of 'shadow inventory' - homes that people would like to sell but that aren't currently on the market, and thus aren't captured in the official number of homes on the market,” said Humphries. “With almost a third of homeowners poised to jump into the market at the first sign of stabilization, this could create a steady stream of new inventory adding to already record-high inventory levels, thus keeping downward pressure on home prices.”
With a Misperception Index of 2 - down from 13 in the fourth quarter - the perception of homeowners in the West was closest to reality, along with that of homeowners in the Midwest. Northeastern homeowners' perception of their own homes' values was the farthest from reality, with a Misperception Index of 11, up from 3 in the fourth quarter, the survey showed. (Reuters)