Half of U.S. Homeowners Do Not Think Their Home's Value Has Decreased
Months of government bailouts and stock market volatility brought Americans' perception of the values of their own homes closer to reality than it was last quarter, but surprisingly half of U.S. homeowners still believe their home is insulated from the nation's home value declines, according to the Zillow Q3 Homeowner Confidence Survey.
This quarter, 49 percent of homeowners said they think their own home's value has increased or stayed the same over the past year. However, nearly three-quarters (74 percent) of homes have lost value in the past 12 months, according to preliminary analysis of Zillow's Q3 Real Estate Market Reports, which will be released Nov. 12.
McCain Voters Show More Confidence About Own Homes' Values
Homeowners who said they plan to vote for John McCain on Nov. 4 were slightly less realistic about their own homes' values over the past year and into 2009. But both McCain and Obama voters were over-confident, with only 50 percent of prospective McCain voters and 56 percent of prospective Obama voters saying their homes value had decreased over the past year. Almost three-quarters (74 percent) of homes across the country actually decreased in value(3).
- Fewer expect to buy or sell a home in the near future. 3 percent said they plan to sell their home in the next six months, down from 5 percent last quarter. Another 3 percent said they plan to buy a home, down from 4 percent in the second quarter.
- Fewer are planning home-related finance activity, with 5 percent planning to refinance or to take out a second mortgage or home equity loan in the next six months, down from 7 percent in the second quarter.
- 53 percent are planning either major (like replacing the roof or remodeling the kitchen) or minor (like installing a new garbage disposal or painting) home improvements. Of those, 47 percent plan minor improvements and 15 percent plan major improvements.
- Many homeowners expect to spend less on home and non-home-related expenses in the near future. 35 percent said they would spend either somewhat or significantly less on home-related activities, like improvements, new appliances or decor, in the next 12 months.
- 16 percent said they would spend significantly less. Only 3 percent expect to spend significantly more. Homeowners had similar responses when asked how they would spend during the 2008 holiday season, with 52 percent saying they would spend less than last year and 3 percent saying they would spend more.
"After one of the most turbulent quarters in history for the U.S. economy and housing market, you'd expect the reality of dropping home values to start sinking in," said Dr. Stan Humphries, Zillow vice president of data and analytics. "We are seeing some movement toward more accurate perceptions of home value declines, but there's still a significant gap between reality and perception. We're seeing a fascinating distinction in consumer psychology - on the one hand, homeowners appear to understand the reality of today's economy and are curbing their household spending, but on the other hand they still aren't ready to admit that these woes might extend to their own homes. There's clearly still some denial."
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