It’s been two years now since we first fielded our regular Homeowner Confidence Survey — a quarterly barometer on how homeowners perceive their own home’s value and how it relates to the reality of the market.
In this quarterly survey, done with Harris Interactive and based on answers from more than 2,200 U.S. adults, we’ve typically found homeowners to be an optimistic bunch. In the past, homeowners believed their home held its value – or even increased in value – despite market trends showing the opposite as home values rapidly declined over the past couple of years.
This quarter’s poll found an entirely different phenomenon, and one that marks a significant turning point in what we’ve dubbed our Zillow Home Value Misperception Index. For the first time, homeowners are bearish on the value of their own homes, dipping into actual pessimism for the first time. Specifically:
- Just 20 percent of homeowners believe their home gained value in the past year (down from 25 percent in Q3)
- In reality, 28 percent of U.S. homes increased in value over the past year.
Here’s how it played out across the country, with homeowners in the Northeast holding the most pessimistic view on their own homes’ values, those in the South having the most realistic view, and Midwesterners straying slightly optimistic.
This resulted in a Misperception Index of (-2), the first time in our report’s history this index has gone negative.
And here’s how the Zillow Home Value Misperception Index looks over time. Positive numbers show homeowners are optimistic about their own homes’ values, zero means homeowner perceptions are in line with reality, and negative numbers show pessimism in how homeowners perceive the value of their own homes.
While it’s important for homeowners and sellers to have a realistic view of their home’s value, these results show the confusion that reigns in a period where some markets are experiencing improvement, some continue to decline, and still others may be headed for a double-dip in home values (see Zillow chief economist Stan Humphries’ assessment of Q4 market trends). Adding to this confusion is uncertainty in what 2010 will bring, with an end to government-sponsored homebuyer tax credits and forecasted higher mortgage rates.
For full survey results, see today’s press release, or visit the Zillow press room for a .pdf of survey findings.