Last Friday I blogged about how deluded sellers are regarding the current value of their home. A Trulia.com survey showed a huge number of sellers having to slash prices to find a buyer. Today, I'm even more amazed at how deluded the home owning population is given the state of the housing market. I know that June produced a slew of mainstream media reports, screaming that housing recovery was well underway. But recovery doesn't mean health.
A new report from Zillow.com finds that 60 percent of homeowners surveyed believe their home lost value in the past twelve months. In reality, 83 percent of all homes lost value. Owners in the South were the most deluded and those in the West, understandably, were the least. And to make matters worse, 81 percent of all homeowners surveyed actually believe their home value will not fall over the next six months; this as foreclosure numbers rise and all of the action in the housing market continues on the lowest of the low end. I have not found one expert (and I know I will as soon as I write this) who claims that home prices have hit bottom. Sales, perhaps, but not prices.
So you have to ask, why all the optimism? As we all know, it doesn't come from me. I swim in the deep end of the pool with all the real numbers. I think it's possible that some are confusing increased sales activity with sudden total recovery. This will not be a V-shaped recovery, where housing suddenly bounces back to normal levels of appreciation (4-6 percent a year). Housing is likely hit bottom and sit there for a good long while, as foreclosures work through the system, the mortgage market finds its footing, and government intervention changes the way we buy, sell, build and finance homes.
Trust me, I'm all for home appreciation; like I always say, I own a home, and like most Americans, it is my single largest investment. But if we're going to embrace a new responsibility in real estate investment (which I honestly hope we are), then we can't let a few non-negative data points completely skew our vision of realty reality.