Homeowners delusional on value of property

[Pale Blue Dot]

It could never happen to me. That's the common attitude whether the subject is shark attacks, black market organ theft or, apparently, housing price declines.

Despite plummeting values across the nation, 62 percent of homeowners believe their property's worth has actually climbed or stayed the same during the past year, according to a confidence survey commissioned by real estate Web site Zillow. In reality, the market price on 77 percent of properties has dropped and only about 24 percent have risen or held firm, the Seattle company estimates.

Residents of western states are only a little less self-deluding. Fifty-six percent acknowledge the market value of their home fell, while 44 percent believe it maintained or gained worth. The reality is closer to 88 percent and 12 percent, respectively, Zillow said.

"The results are pretty eye-opening," company spokeswoman Amy Bohutinsky said. "They're taking the attitude of, 'not my house.' "

The gap reflects the mind's capacity for denial when, say, evidence suggests someone's largest single asset lost 20 percent of its worth in a year, said Kit Yarrow, a consumer psychologist at Golden Gate University. Assisting the denial is the subjective nature of home values, which - unlike most products - don't come in shiny boxes stamped with a price tag, she said.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/08/06/BUPL125G6V.DTL&tsp=1

This is where our country is right now. The smartest among us are not trying to fool themselves, but are facing reality and trying to make the best of an awful situation.

It's long past time for the entire country to face up to the truth. About everything.

[Malikshah]

1. Although I agree that folks are delusional, Zillow is not an accurate gauge

Having gone through the Zillow process, if you've ever done anything to your home, you need to meticulously record it to check the value as Zillow is basically a glorified pencil-search comp website.

Any improvements are not recorded--this makes sense of course...but I do question the value they assign to improvements made (e.g., new roof, a/c, resurfaced pool, etc.)

The end result is that folks need to document, keep records, and get reputable appraisals.

Also-- demand something more than a lazyass pencil search...

[Pale Blue Dot]

2. I see your point,

but it seems to have little to do with the survey they conducted.

[Malikshah]

11. My point is the site is not reputable and creates confusion and angst

among homeowners without offering some solutions.

Being the harbinger of doom is not terribly productive.

Work toward solutions-- Willow doesn't do that.

[DesertFlower]

5. according to zillow my house

dropped $300,000 in the last 2 years. not just my house, but every house in the neighborhood. i'm not really worried since it's still worth $100,000 more than it cost.

[ingac70]

6. My home was added on to 10 years ago...

and zillow still has the original square footage, says only one bathroom.

[Warpy]

3. I see them having desperation yard sales

and being deeply shocked that all their name brand handbags and shoes will only bring about five bucks or so when they cost hundreds of dollars new.

The worth of what you own is only what somebody else will pay for it, not what you got suckered into paying for it. That is especially true of real estate.

It's amazing to see people just starting to learn that lesson. Those of us who have been poor folks have always known it.

[babylonsister]

4. Denial? Those trying to sell a home aren't so disillusioned. nt

[ozymandius]

7. The selling process tends to smack denial in da-face.

My mother just went through the buy/sell process. She had no grand fantasies about the value of her home. But her expectations meter stammered a bit when it took almost a year to sell the house.

[CanonRay]

8. That's a whole lotta truth to face up to!

Especially taken in one dose.

[davsand]

9. No doubt many real estate markets have been hit hard.

Personally, I would NOT want to be holding property in Florida or Los Vegas right now. Several other markets are in equally bad shape, assuming the reports in the news are accurate.

I will also tell you that in our local market we have NOT seen an across the boards decline in values. In fact, the starter houses locally are trending up-wards slightly in recent months. Dunno what will transpire in the upcoming months, but right now we are not seeing rampant declines.

I have a huge distrust of some of these news reports about values, because I was sitting there one day with the local Board of Realtors newsletter in front of me with a report of monthly activity, and at the SAME time one of the national newspapers put out a report saying my county was down by 5%. The local report showed a minor (2%) increase in median sales price for the reported period that newspaper claimed was down.

The inventory is high right now, and people are NOT bidding property up like they were a couple of years ago. I have NO doubt that we will see some decline in sale prices, because there is just TOO much out there competing. Add in the market influence of increasing foreclosures, and you will see a sellers' market bottom out pretty quickly. It is probably coming, but it is NOT here yet.

YMMV depending on your location, but we are still holding on here where I live.


Laura



BTW, I want to insert a personal comment here about Zillow or ANY other online "appraisals" website. They are free, and you get exactly what you pay for with those. There is a real good reason why banks require an appraisal from a licensed appraiser before they will end any money.

[knitter4democracy]

10. Um, Zillow got the wrong house for mine.

It also has price estimates on parts of lots (what's that about?) and on the city drainage pond behind our house. I'm going to say that site isn't worth crap. It also says the the smaller ranch across from us is worth more than we bought ours for three years ago--when we have more sf, more bathrooms, better siding, and a newer roof. Hmm.

[TexasObserver]

12. Homeowners remain in denial until it's too late, too often.

They see empty spec houses all around, they see houses that won't sell, but in their minds, their house is still worth that price that the neighbor sold his house for back in 2005. As houses get repossessed, as loans default, as the neighborhood runs down, as foreclosures and spec house get sold for much less, homeowner clings to a number that he or she will never see in the next three years.