Despite continued home value declines nationwide, U.S. homeowners remain bullish about their own home's value. For the second consecutive quarter, homeowner perception about changes in their personal home value is markedly off from the reality, according to a recent Zillow(R) survey of homeowner confidence conducted by Harris Interactive(R).

Perception-Reality Gap Remains Wide

According to the survey, 72 percent of homeowners believe their home's value has increased or stayed the same the past year. The reality is 75 percent of U.S. homes actually decreased in value from the same period a year ago, according to Zillow. In fact, in the first quarter home values dropped 7.7 percent year-over-year, which was the largest year-over-year decline in more than a decade, according to the Zillow Q1 Home Value Report released separately today. Since the confidence survey was first conducted last December, homeowners show signs they are moving closer to reality as 5 percent more respondents in Q1 said they think their home value has decreased in the past year compared to those surveyed in Q407.

Homeowners in the Northeast may have a better grasp on reality than those in other parts of the U.S. as 27 percent of Northeast homeowners believe their home increased in value in the last year, which was in line with the actual increase (26%). While more homeowners in the West believe their home has decreased in value (37%), it's wildly off from the actual 85 percent of homes that declined in value in the last year.

Planned Housing Actions and Home Related Investments Remain Consistent

The percent of homeowners who say they plan to make home improvements, sell or finance a home in 2008 remained essentially unchanged from last quarter despite further market deterioration. About one-third of homeowners say they are equally or more likely to sell their homes, take out a home loan, refinance or take out a second mortgage, regardless of their perception of home value change.



What's Driving Homeowner Perception?

"While we assume there's a fair bit of owner denial reflected in these results, we also believe a large portion of the population simply isn't paying close attention to their housing market because they're not currently looking to sell or finance," said Dr. Stan Humphries, Zillow.com vice president of data & analytics. "But even among those who say they're planning home-related activities this year, confidence appears strong despite continuing declines. Approximately one-third of homeowners say they are equally or more likely to sell their home, refinance or take out a home equity line of credit this year, which is essentially unchanged from sentiment in the fourth quarter."