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Survey: Homeowners Threatened by Lower Home Prices

The majority of national homeowners said in a survey that falling market values are currently a greater threat to them than a fire or a natural disaster.

Out of 1,005 homeowners throughout the country who participated in the Koski Research survey, 58% believe a drop in home prices has a greater impact on their investment than a fire (15%), tornado (9%) or hurricane (8%).  

According to the survey taken in October, 62% of the respondents said owning a home is their biggest investment. Meanwhile, 37% think that buying a home today is a “risky” investment and nearly a fifth of the survey participants said they are “not sure” they would recommend homeownership to a young person interested in buying a house.

The survey also revealed that homeowners are not optimistic that home values will increase anytime soon in the near future.

Over the last three years, 67% of the survey respondents think that home prices have declined in their communities and 19% believe this trend will continue in the next 12 months. Also, 67% do not anticipate any type of change in home values within the next year.

“The truth is nobody knows where home prices are going and the risk of substantial further drops is very real,” said Robert Schiller, founder of the Standard & Poor's Case/Schiller home price index. “While there are some positive signs, there are ongoing factors that are likely to keep pressure on home prices. Government policy initiatives to support the market are offset by persistently high unemployment, foreclosures and difficulty in obtaining mortgage financing.”

In the survey, 52% of the respondents said that owning a home today is the American dream, while 48% view it as a nightmare. A little more than 50% of homeowners who purchased their property four to seven years ago reported that their home is currently underwater.

Almost one quarter of homeowners who participated in this survey also said they are likely to sell their property in less than five years.

“The survey results demonstrate how the decline in home values continues to undermine homeowners' confidence in the housing market,” said Scott Ryles, CEO of Home Value Insurance Company, a Columbus, Ohio-based insurance carrier. “Home prices for single family homes are down nearly 4% from a year ago and homeowners clearly see the ongoing uncertainty surrounding housing values.

“Declines in home values across the country have caused homeowners to realize that owning a home is not a risk-free investment,” Ryles continued. “The prolonged drop in values and ongoing market uncertainty has been a wake-up call for homeowners.”