Online Survey Finds Homeowners Still in Denial About Prices

MBA (5/12/2008 ) Sorohan, Mike
When it comes to falling home prices, most homeowners still seem to think it’s something that affects their neighbors.
The good news, according to a new survey from Zillow.com, is that many homeowners are taking a more realistic look at the true value of their home. The bad news, said Zillow.com Vice President of Data and Analytics Stan Humphries, is that homeowners’ perception of their home value continues to be “markedly off from the reality.”

Despite data from the Office of Federal Housing Enterprise Oversight that showed home prices nationwide saw declines, the Zillow.com survey found that more than 70 percent of homeowners believed their home’s value increased or stayed the same in the past year.

Zillow’s own Q1 Home Value Report fond that in the first quarter home values dropped 7.7 percent year-over-year. But Humphries said homeowners continue to be in denial about their home’s value.

"While we assume there's a fair bit of owner denial reflected in these results, we also believe a large portion of the population simply isn't paying close attention to their housing market because they're not currently looking to sell or finance," Humphries said. "But even among those who say they're planning home-related activities this year, confidence appears strong despite continuing declines.”

Homeowners in the Northeast may have a better grasp on reality than those in other parts of the U.S. The survey found that 27 percent of Northeast homeowners believe their home increased in value in the last year, which was in line with the actual increase (26 percent). Conversely, while more homeowners in the West believe their home has decreased in value (37 percent), it's “wildly off” from the actual 85 percent of homes that declined in value in the last year, Humphries said.

The survey said one-third of homeowners equally or more likely to sell their home, refinance or take out a home equity line of credit this year, which is essentially unchanged from sentiment in the fourth quarter. The percent of homeowners who say they plan to make home improvements, sell or finance a home in 2008 remained essentially unchanged from last quarter despite further market deterioration.

The online survey, conducted online by Harris Interactive, took place in December among 1,590 adults. The survey was not based on probability samples, thus no estimates of theoretical sampling error can be calculated.