Delusions of Grandeur

Forget the phrase “Not in my backyard.” These days, homeowners are thinking “Not my house!”

That, at least, is the sentiment revealed in a survey from the real-estate data company Zillow.com, which each quarter conducts a survey to gauge homeowner confidence in the health of the housing market. Zillow.com, based in Seattle, is a website that tracks home values across the country.

In its second quarter survey, 62% of the 1,361 homeowners who responded to the survey by Zillow said they believe the value of their own homes has increased over the past year.

But according to Zillow, that high level of optimism is out of sync with reality. The company’s research shows that the 77% of U.S. homes depreciated in value over the past year. Only 19% appreciated and five percent remained the same.

The survey also found that people who thought their home’s value had increased were more likely to make improvements. About 56% of all respondents said they would be spending money on home improvements. Of those, about 17% said they would be spending money on major improvements, such as replacing a roof or remodeling a kitchen; 49% said they would be investing in minor improvements, such as repainting a room or installing a garbage disposal.

Though optimistic about the value of their own homes, homeowners were less confident about their expectations for the market in which they lived. Seventy-five percent of homeowners expected their home value to increase or stay the same over the next six months, while 25% expected it to decline. Forty-two percent expected the value of the market in which they lived to fall, and 58% thought the values would increase or remain the same.

More than 90 percent of homeowners report that foreclosures have occurred in their local market already, and 80 percent anticipate that the rate of foreclosures over the next six months will remain steady. Many of those people—70 percent—are concerned that the falling value of neighbors’ homes will affect the value of their own homes. Yet, half of those surveyed don’t think that the government should provide assistance for people facing foreclosure to keep their homes.

Harris Interactive conducted the survey online for Zillow between June 30 and July 2.

Source: Wall Street Journal and Zillow.com