As some parts of the U.S. housing market work their way out of the housing recession, while the majority of markets continue to decline, homeowners across the country had mixed opinions of the state of their own homes' values, according to the Zillow Q1 Homeowner Confidence Survey.
Nationally, homeowners were overconfident, with half believing their own home's value declined in the past year. In reality, 65% of U.S. homes declined in value, according to Zillow's Q1 Real Estate Market Reports.
Meanwhile, 7% of homeowners, which translates to 5.3 million homes, said they would be ‘very likely’ to put their home on the market in the next 12 months if they see signs of the housing market improving. By comparison, 5.2 million existing homes were sold during 2009.
An additional 8% of homeowners said they would be ‘likely’ to put their home on the market, and another 14% said they would be ‘somewhat likely.’ Zillow describes these homeowners as ‘sidelined sellers’ – a component of shadow inventory that, if materialized, could significantly delay the timing of a market recovery.
The most pessimistic homeowners reside in the West, even as home values in many California and Colorado metros have stabilized over the past year, according to Zillow's first-quarter market report. Eighteen percent of Western homeowners believe that their home gained value over the past year, when in reality 31% of Western homes gained value.
On the other end of the spectrum were Southern homeowners, who were overly optimistic, even as many Southern markets continue to see significant decreases in home values. Thirty-four percent of Southern homeowners said their home gained value over the past year; according to Zillow, 27% of homes in the South gained value. That resulted in a Misperception Index of 14.
‘It is clear that there is a lag between market realities and public perceptions of home values,’ says Zillow's chief economist, Stan Humphries. ‘For quite a while after the market peak, Western homeowners continued to believe their own homes' values were doing better than they were in reality. Conversely, after years of press coverage about declining home values, homeowner perceptions are now in line with market conditions from early last year, although the Western market has improved since then.’