RISMEDIA, Feb. 8, 2008-Despite repeated highly publicized reports of a home sales slump and pricing slides, there’s a surprising amount of positive consumer sentiment — and perhaps a good measure of homeowner denial as well: Even in a negative home pricing environment, 77% of homeowners from around the country believe the value of their home has increased or remained the same in 2007, according to a recent Zillow.com survey conducted by Harris Interactive(R).
What’s more, sizable fractions of all homeowners — not just those who believe their homes appreciated in 2007 — say they are planning to do things in 2008 — even before the Fed’s latest interest rate cuts – that you might not expect during the housing, construction and credit slumps:
- 82% will spend the same or more on minor home improvements (install new garbage disposal, repaint or wallpaper a room).
- 67% say they will spend the same or more on major home improvements (replace the roof, remodel the kitchen) this year.
- About a third say they are more likely or equally as likely to:
- Take out a home equity loan (35%)
- Refinance their mortgage or take out a second mortgage (36%)
- Sell their homes (34%)
How Bad It Is in the Reality-based World
The Zillow(R) Q3 Home Value Report says U.S. home values dropped 5.7% nationwide year over year (2007 to 2006). Zillow plans to release its Q4 report Feb. 12 and preliminary results indicate home values in most U.S. markets have continued their descent. In a recent report, Merrill Lynch predicted “housing prices will remain in free fall,” declining 15% in 2008 and 10% in 2009, “with more depreciation likely beyond the forecast period,” even if the Federal Reserve continues to cut interest rates.
How Homeowners Perceive the Situation
About a third of homeowners (36%) in the Zillow.com Home Value Survey said their homes had actually increased in value during 2007. Zillow’s Zindex(R) data proves the contrary, showing median value declines across regions as of October 2007.
What’s Driving Homeowner Perception?
“This survey reveals that despite the data to the contrary, people either aren’t paying attention to their housing market or are in denial about their own home’s value,” said Dr. Stan Humphries, Zillow.com vice president of data & analytics. “This likely reflects the fact that most Americans have not realized home-related losses because they’re staying in their homes. Even in declining markets where a greater percentage of new homeowners are underwater on their mortgage, it’s important to remember most people are not really affected by declining values unless they absolutely must sell or need to immediately refinance or withdraw equity. This has contributed to the healthy investment intent, particularly in home upgrades, despite the downward trending markets.”
How to Stay on Top of a Home’s Value?
Zillow recently increased its database of homes with Zestimate valuations to 67 million, which equates to about three out of four U.S. homes. People can easily check a home’s value by visiting Zillow.com and typing in an address.
For more information, visit www.Zillow.com.
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