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Prescott homeowners pricing perceptions are still high

According to the Zillow Q4 Real Estate Market (2008) survey released yesterday by Zillow.com, some 70 percent of homeowners surveyed believe their home's value will either increase or stay the same in the first six months of 2009, while only 30 percent expect a decrease in value.

Fifty-seven percent believe their home lost value last year, up from 38 percent of those surveyed in the second quarter of 2008.

In reality, 76 percent of all U.S. homes lost value in 2008, according to the Q4 report.

See Zillow Blog: Homeowners Call a Bottom: Optimism or Delusion?

Homeowners in the Prescott and Prescott Valley Arizona market area are probably lumped into the West's stats (see below) released from Zillow recently.  If true, then homeowners are still adjusting to the reality of the what their homes are worth. 

Homeowners in the West, where values were hardest-hit, lost some of their optimism in the fourth quarter, but home values continued downward, leaving Western homeowners' perceptions among the farthest from reality with a Misperception Index of 13 (the same as last quarter). Southerners' perceptions were farthest from reality, with a Misperception Index of 14. 

With a Misperception Index of only 3 -- down from 20 in the third quarter -- the perception of homeowners in the Northeast was closest to reality. Well over half (57 percent) of Northeastern homeowners believe their own home's value declined during 2008, while 20 percent believed it stayed the same. According to Zillow's fourth-quarter data, 71 percent of homes in the Northeast declined in value during 2008.

The country is optimistic, however, and more than half of those surveyed in Zillow.com's Q4 Homeowner Confidence Survey believe their own home lost value in 2008, more than two-thirds appear to believe that the worst may be over.  This optimism may be misguided though...read on.

"It's clear that the 'not my house' sentiment that was so prevalent in earlier surveys is waning, and homeowners are opening their eyes to the unfortunate reality of significant losses in home values across most of the country," said Dr. Stan Humphries, Zillow's vice president of data and analytics, in a statement. "That said, there's a curious optimism for homeowners when asked about the future -- most seem to believe we've hit a bottom and the worst has passed. Unfortunately, the data tells another story. With year-over-year home value losses continuing to accelerate, most areas of the country will see housing values get worse before they begin to stabilize."  

In my last Prescott Area Real Estate and Foreclosure Market Report, the data showed that short sale and foreclosed/REO/bank-owned homes were selling about 20% less per square foot than conventional homes and at a much quicker pace. 

This could be due to a couple of reasons:

1. Most banks are pricing their homes using several BPOs (Broker Price Opinions) at the price that allows them to sell in the 90 to 120 day timeframe that they are generally looking for.See:  Why are REO homes priced all over the place?
2. Some homeowners are pricing their homes based on what they paid for them; what they "need to get"; what their neighbor got last year; what feels right to them; or worst of all by an agent who does not do the pricing research and is not in tune with today's market.  And unfortunately, many sellers are pricing their homes too high at the outset, thinking that they will get a lower offer and negotiate...the offers don't come...the home isn't even shown and 6 months later, it's worth even less!

The Zillow Data:

Homeowner Perception by Region

For more information about what your home is worth in today's market, or to find out how to profit in today's market, please contact me at 928-710-1717.