51% of US owners say their property value fell

Source : Business Times - 30 Oct 2008

Perception of values more accurate as economy’s weakness hits home: survey

A majority of US homeowners believe the value of their property fell over the past year, according to a survey of real estate market confidence by data company Zillow.com.

The survey of 1,388 homeowners between Oct 7 and Oct 9 found 51 per cent said their houses had lost value, while 49 per cent believed the value had stayed the same or increased, Seattle-based Zillow found.

In an earlier survey, taken from June 30 to July 2, 38 per cent said their homes had lost value and 62 per cent said they had gained or stayed the same. Three quarters of homes have actually fallen in value over the past year, Zillow said.

‘The bad news on the general economy front is getting through to people and certainly is making their perception of home values more accurate,’ Zillow’s vice-president of Data and Analytics Stan Humphries said in an interview.

The median price of an existing home dropped to US$191,600 in August, down from a record high of US$230,200 in July 2006, according to the Chicago-based National Association of Realtors.

The disconnect between owners’ perception of value and actual market conditions makes it harder for real estate agents to price homes to sell, Mr Humphries said.

Homeowners ‘have a larger sense of the personal wealth of their portfolio than is actually the case,’ he said.

Zillow’s Home Value Misperception Index shrank to 16 in the third quarter from 32 in the second quarter. An index value of zero indicates homeowner perceptions are in line with actual values.

Homeowners also were less optimistic about the future. About 21 per cent said they believe their home’s value will rise over the next six months, compared with 32 per cent who predicted price appreciation in the previous survey.

About 57 per cent said they thought property values in their local market will fall.

‘It’s human nature for people to imagine that what they have is nicer than what their neighbours have and unfortunately that’s not always the case,’ said realtor Elizabeth Blakeslee, an agent with Coldwell Banker Residential Brokerage in Washington, DC and a regional vice-president of the National Association of Realtors.

Purchases of existing homes jumped 5.5 per cent in September to a 5.18 million annual pace, the highest level in a year, according to NAR. Part of the reason is that a flood of less expensive foreclosed property drew buyers.

Foreclosure-related sales accounted for 35 per cent to 40 per cent of total September sales, NAR said. The median price dropped 9 per cent.

Respondents to the Zillow survey who said they plan to vote for Republican presidential nominee John McCain were more optimistic about their home values than were supporters of Democrat Barack Obama.

About 50 per cent of would-be McCain voters said their home values have decreased in the last year, compared with 56 per cent of Obama voters, Zillow said. — Bloomberg