You would think that the sheeple would have been able to buy a clue by now. It turns out that most of them are still traveling on the river Denial.
Almost half of U.S. homeowners think their homes are insulated from the broader national decline in prices, according to a survey by real-estate Web site Zillow.com.
Despite a financial crisis, market volatility and continued indications of declining home prices, 17% of homeowners told Zillow they think their own home's value stayed the same over the past year, while 32% said their home has appreciated in value. Zillow estimates that nearly three-quarters of homes have lost value in the past 12 months.
However, the numbers in the third-quarter indicate that more homeowners are seeing the effects the bursting of the housing bubble has on them. In Zillow's second-quarter survey, 62% of respondents thought that their home value had increased or stayed the same over the past year.
The survey was conducted Oct. 7-9, while stock markets tumbled in one of the worst selloffs in history, making the results all the more surprising.
“The human irrationality in terms of pricing and valuing what is ours has always been a barrier to good decision making, and the housing market is no different,” Duke University Professor of Behavioral Economics Dan Ariely said is response to the survey results. Worries persist that unrealistic expectations by sellers can prolong the housing downturn, as prices take longer to find a bottom.
Most homeowners see stability on the horizon. Some 40% believe their home's value will stay the same over the next six months, while 21% think their home will appreciate. But that stability ends at their door, as 57% said home values in their local market will decrease over the next six months.
“We're seeing a fascinating distinction in consumer psychology — on the one hand, homeowners appear to understand the reality of today's economy and are curbing their household spending, but on the other hand they still aren't ready to admit that these woes might extend to their own homes,” said Stan Humphries, Zillow vice president of data and analytics. “There's clearly still some denial.”
The reality gap cut across party lines, though a small disparity was noted. Some 50% of respondents who were McCain supporters said their home had decreased in value, while 56% of Obama backers said their homes had depreciated.