Survey: Homeowners in denial about falling values

Although not a story about commercial property, I know quite a few commercial brokers who would agree that this same seller sentiment is consistent within our own market. There is a lot of denial going on within the commercial sector as well, albeit not as bad, but it's there.

Zillow.com finds that a majority of homeowners believe their homes are insulated from the housing crisis, which has seen 77 percent of the nation’s homes fall in value during the second quarter.

The online real estate company’s second-quarter homeowner confidence survey found that 62 percent of homeowners believe their homes have increased in value despite the nation’s widely reported housing woes and market data indicating the contrary.

Homeowners are even more optimistic looking ahead as they anticipate their homes will be worth more in six months. Still, many homeowners are concerned that foreclosures in their area could hurt values over the next year.

Zillow said preliminary results of its second-quarter real estate market report, to be released Aug. 12, show 77 percent of the nation’s homes dropped in value during the second quarter, while 19 percent rose in value and 5 percent stayed the same.

“Whether it’s apathy, confusion or just plain denial, homeowners seem to believe the housing crisis affects every other home but ‘not my house,’ underscoring a wide gap between homeowners’ inflated perceptions of their home’s value and the gloomy market reality,” Zillow said.

The company created an index to measure the disparity, called the Home Value Misperception Index. It measures the difference between the percentage of homeowners who believe their home value increased over the past year and the percentage of homes that actually increased in value.

Nationally the index stood at 32 in the second quarter. The West, with the highest proportion of homes that declined in value during the second quarter at 88 percent, has the narrowest gap between reality and actual home values as measured by an index reading of 23. The South had the widest gap, with an index reading of 36. The Northeast, where 74 percent of homes decreased in value, had a misperception index of 29.

Zillow’s findings are based on a survey of 1,361 U.S. homeowners conducted by Harris Interactive.