Despite stunning news of stock market plunges, controversial government bailouts, diving home prices, stalled car sales, familiar retail stores shuttering their doors, rising bankruptcies, bank failures, and constant talk of another Great Depression, almost half of all Americans believe their own homes are either maintaining value or they are actually gaining equity. As all about them hit the skids, many Americans maintain the delusion their own homes are immune. This according to the Zillow Q3 Homeowner Confidence Survey.
This is really an amazing finding. What can explain it? It’s mine, so it’s better? I put money into it, so it’s now worth more? It’s always gained value before, so now it must be as well? The falling home prices have something to do with sub-prime mortgages. I don’t have a subprime mortgage, so I’m all right?
This quarter, 49 percent of homeowners said they think their own home’s value has increased or stayed the same over the past year. Earth to Planet Denial: nearly three-quarters (74 percent) of homes nationwide have lost value in the past 12 months, according to preliminary analysis of Zillow’s Q3 Real Estate Market Reports. National estimates say that at this point, 20% of homes have lost so much value that the owners are “under wter” or owe more than the home is worth. Predctions are that soon that figure will be 25% of the nations’s homes.
Check out Zillow’s graph of our Nation of Denial:
Homeowners in the South and West had the most accurate perceptions of home values. In the South, where 67% of homes decreased in value, 47% of homeowners thought their homes had lost value. In the West, where 85% of homes declined in value, 65% of homeowners thought their homes had lost value. Northeasterners’ perceptions were most out of line with reality: 71% homes there lost value, but only 45% of homeowners believed they themselves had lost equity.
Well, small consolation–we in the West are aware of the pickle we’re in…