Survey: Homeowners Think Housing Looks Better But...

Homeowners' perceptions of the housing market are improving, with over eight in 10 believing their home's value will increase or stay the same in the next six months, according to the Zillow 2Q Homeowner Confidence Survey. This is the highest percentage recorded in this category since the survey in the second quarter 2008. But the company's economist thinks such optimism is misplaced. Approximately 60% believe their homes lost value in the preceding 12 months; Zillow compared this to its real estate market reports, which showed 83% of homes lost value during that time. This gives the Home Value Misperception Index for the quarter a value of 13, up from 6 in the first quarter but down from 32 one year prior. When the index is zero, homeowners' perceptions are in line with reality. Stan Humphries, Zillow chief economist, said "While their perceptions of past declines in their homes' values have gotten more realistic over the past year, each quarter homeowners express the opinion that the worst is behind them. Unfortunately, that has not been the case thus far and it's far from clear that it's the case today. Despite some signs of slowing depreciation in many markets in the second quarter — the height of the 2009 homebuying season — there are many market fundamentals that will challenge home prices in the near-term: high for-sale inventory levels, foreclosures, negative equity, and price-to-rent ratios that still aren't back to historical levels yet."