/PRNewswire/ -- Homeowners(i) are more pessimistic about the short-term future of home values in their local market than they have been in the past three quarters, according to the Zillow second quarter Homeowner Confidence Survey(ii). One-third (33 percent) believe home values in their local housing market have not yet reached a bottom, while 38 percent believe they have already reached a bottom.
More than one-quarter (28 percent) of U.S. homeowners said home values in their local real estate market will decrease in the next six months, up from 20 percent in the first quarter. Additionally, less than one-third (30 percent) believe home values in their local market will increase, down from 42 percent in the first quarter.
Despite the increasing pessimism, a large number of homeowners anxiously await the opportunity to sell. Five percent of U.S. homeowners say they are very likely to put their home on the market in the next six months if they see signs of a real estate market turnaround. This translates into 3.8 million homes with the potential to come into the market(iii). By comparison, 5.2 million existing homes were sold in all of 2009(iv).
Looking backward, homeowners also became slightly more pessimistic about the performance of their own homes' values in the past year. Less than a quarter (24 percent) of homeowners said their home had increased in value in the past year, compared to 27 percent in the first quarter. In reality, 34 percent of homes increased in value in the second quarter, according to the Zillow Q2 Real Estate Market Reports.
"As homeowners have been so inundated recently with news of declining home sales post-tax credit, it's no surprise that they would become more pessimistic about the future of home values," said Dr. Stan Humphries, chief economist at Zillow.com®. "Homeowners have become much more responsive to current market conditions than they were just two years ago, when a more typical reaction was denial.
"Given this sentiment, we're surprised so many homeowners believe their market has already bottomed. Although our Q2 reports indicated signs of stabilization in 30 percent of markets we cover, we're concerned that this was at least partly due to the homebuyer tax credits. We're already seeing payback for the credits in the form of declining home sales, and this trend will push up inventory levels and exert downward pressure on home values. Add in the inventory from the millions of sidelined sellers and we'll take more steps back. Our forecast remains largely unchanged: We're in for an L-shaped recovery that will likely keep annualized home value appreciation very low for the next three to five years."
Homeowner Perception by Region ------------------------------ Homeowner Perception of Home Value US Q2 Change in Past Year by Region 2010 Northeast Midwest ---------------------------------- ------ --------- ------- My Home's Value Has Decreased 49% 40% 50% ---------------------------------- --- --- --- My Home's Value Has Stayed the Same 27% 37% 30% ----------------------------------- --- --- --- My Home's Value Has Increased 24% 23% 20% ----------------------------- --- --- --- Market Reality: Homes Reporting Year- over-Year Value Changes in Q2, according to Zillow ------------------------------------- Actual Percent of Homes that Decreased 61% 53% 70% -------------------------------------- --- --- --- Actual Percent of Homes that Stayed the Same (+/-1%) 7% 9% 7% --------------------------------------- --- --- --- Actual Percent of Homes that Increased 32% 38% 23% -------------------------------------- --- --- --- Q2 2010 Home Value Misperception Index(v) -2 -5 4 -------------------------------- --- --- --- Q1 2010 Home Value Misperception Index 5 -2 4 -------------------------------------- --- --- --- Q2 2009 Home Value Misperception Index 13 10 10 -------------------------------------- --- --- --- Homeowner Perception of Local Market Value in Next Six Months ------------------------------------ Home Values In Local Market Will Decrease 28% 24% 32% -------------------------------- --- --- --- Home Values In Local Market Will Stay the Same 42% 45% 46% ------------------------------------- --- --- --- Home Values In Local Market Will Increase 30% 31% 22% -------------------------------- --- --- --- Homeowner Appreciation Expectations over the Next 12 Months ----------------------------------- How Much Own Home's Value will Increase 6% 10% 10% (Median number based on homeowners who expect their home to increase in value in next 12 months) --- --- --- --------------------------------------- How Much Own Home's Value will Decrease 10% 10% 20% (Median number based on homeowners who expect their home to decrease in value in next 12 months) --- --- --- --------------------------------------- Homeowner Perception of the Timing of the Real Estate Market Bottom ------------------------------------- The Housing Market Has Already Hit Bottom 38% 39% 36% ---------------------------------- --- --- --- The Housing Market Has Not Yet Reached Bottom 33% 35% 32% -------------------------------------- --- --- --- I Don't Know When the Housing Market Will Reach Bottom 29% 26% 32% ------------------------------------ --- --- --- Homeowner Perception of Home Value Change in Past Year by Region South West -------------------------------------------- ----- ---- My Home's Value Has Decreased 47% 65% ----------------------------- --- --- My Home's Value Has Stayed the Same 25% 15% ----------------------------------- --- --- My Home's Value Has Increased 28% 20% ----------------------------- --- --- Market Reality: Homes Reporting Year-over- Year Value Changes in Q2, according to Zillow ------------------------------------------ Actual Percent of Homes that Decreased 65% 58% -------------------------------------- --- --- Actual Percent of Homes that Stayed the Same (+/-1%) 7% 7% -------------------------------------------- --- --- Actual Percent of Homes that Increased 28% 35% -------------------------------------- --- --- Q2 2010 Home Value Misperception Index(v) 8 -15 ----------------------------------------- --- --- Q1 2010 Home Value Misperception Index 14 -12 -------------------------------------- --- --- Q2 2009 Home Value Misperception Index 18 7 -------------------------------------- --- --- Homeowner Perception of Local Market Value in Next Six Months --------------------------------------------- Home Values In Local Market Will Decrease 28% 26% ----------------------------------------- --- --- Home Values In Local Market Will Stay the Same 41% 36% ----------------------------------------- --- --- Home Values In Local Market Will Increase 31% 38% ----------------------------------------- --- --- Homeowner Appreciation Expectations over the Next 12 Months -------------------------------------------- How Much Own Home's Value will Increase 5% 10% (Median number based on homeowners who expect their home to increase in value in next 12 months) --- --- --------------------------------------------- How Much Own Home's Value will Decrease 10% 10% (Median number based on homeowners who expect their home to decrease in value in next 12 months) --- --- --------------------------------------------- Homeowner Perception of the Timing of the Real Estate Market Bottom ----------------------------------------- The Housing Market Has Already Hit Bottom 37% 40% ----------------------------------------- --- --- The Housing Market Has Not Yet Reached Bottom 33% 32% --------------------------------------------- --- --- I Don't Know When the Housing Market Will Reach Bottom 30% 29% ----------------------------------------- --- --- (NOTE: Column percentages may not total 100 percent due to rounding)Long-term home value expectations vary by region
Looking further into the future, the majority of homeowners believe their own homes' values will either increase (27 percent) or stay the same (35 percent) in the next 12 months, while 12 percent expect a decrease and 26 percent don't know.
Of those who expect their home's value to increase, the median expectation is a rise of 6 percent, although that varies by geography. Northeastern and Western homeowners who expect an increase anticipate a median rise of 10 percent, while Southern and Midwestern homeowners expect a median increase of 5 percent. Those who expect their home's value to decrease in the next year anticipate a median decrease of 10 percent.
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