Confidence in the US real estate market is mixed across the country with some areas having inflated expectations of property values and others underestimating prices, a new report shows.
Nationally only 50% of home owners thought their property value decreased during the past year when in reality 65% of US real estate lost value, says the report from Zillow on the first quarter of the year. It also found that 23% of homeowners said they believe their home’s value was stagnant, compared with Zillow data that showed only 7% of homes did not experience a change in value.
But regionally in some areas there was more confidence than in others. In the West, 18% of homeowners believe that their home gained value during the past year, but Zillows figures showed that in reality 31% of Western state homes appreciated.
‘It is clear that there is a lag between market realities and public perceptions of home values.
For quite a while after the market peak, Western homeowners continued to believe their own homes’ values were doing better than they were in reality,’ said Zillow chief economist Stan Humphries.
‘Conversely, after years of press coverage about declining home values, homeowner perceptions are now in line with market conditions from early last year, although the Western market has improved since then,’ he added.
In the South, 34% of homeowners said they believed their home to have appreciated, when in reality, Zillow data showed only 27% of homes appreciated. ‘We see the opposite phenomena in the South where home values in most markets, with the exception of Florida, took some time to begin falling.
Many markets there have recently joined the housing recession in earnest, with five of the nine Southern states tracked by Zillow hitting their home value peak after 2007, but homeowners there are likely to believe the downturn has not affected them,’ explained Humphries.
‘This could also be a result of the fact that most attention has been on the hardest hit areas of California, Florida, Nevada, Arizona and Michigan, and homeowners outside of these markets may have less information about what has happened in their local markets,’ Humphries added.
Looking ahead, 43% believe their home’s value will remain even during the next six months, while 39% believe their home will appreciate and 18% believe it will decrease.
Some 7% said they would be ‘very likely’ to put their home on the market in the next 12 months if they see signs of the housing market improving. And 8% said they would be ‘likely’ to put their home on the market with 145 saying they would be ‘somewhat likely’ to do so. These homeowners represent sidelined sellers, a component of shadow inventory that if materialized, could significantly delay timing of a market recovery, the report also says.