Homeowner Confidence Declines, But Most Optimistic About Future

Zillow’s quarterly Homeowner Confidence Report reveals all-time low levels of confidence in their homes, with 60% of homeowner believing that their homes have lost value in the last 12 months. However, they are still more optimistic than the reality: 80% of homes have lost value in the last year.  The 60% level indicates the closest homeowners have come to predicting the reality of the market since the survey began at the beginning of 2008.

On a positive note, 74% of survey participants believed that value of their home would not decline any further, with 27% believing their home values will increase. In the Northeast, the most optimistic region,  77% of survey participants believed that the value of their home would not decrease, while 33% believe it will increase.

Therefore, although homeowners are aware of their declining property values, they seem to believe that the situation will improve. In a real estate market where so much is based on perception, this seems to be a positive sign.

 

More Depressing Housing News

Zillow released their 2008 Real Estate Market Report that showed $3.3 trillion in lost property values last year.  The declines in property values are directly causing the slowdown in reverse mortgage.  Reverse mortgage activity has been flat or down slightly for the last six months.  When you consider that reverse mortgage activity was doubling in size every two years up until the middle of 2007, the flattening amounts to a massive slowdown.

The Zillow report showed that the hardest hit market was Modesto, California — unsurprising, that.  Nationally, roughly one out of six homeowners owes more on their mortgage than their home is worth.

Seniors have not been as hard-hit by the declines, however, because they were not as likely to speculate on development properties or purchase homes in “bubble” communities.  As a result, their home values have not declined as much.  More importantly, most seniors have built up high equity levels and as a result are not as at risk of going “underwater”.