The Zillow(R) Q3 Home Value Report says U.S. home values dropped 5.7 percent nationwide year over year (2007 to 2006). Zillow plans to release its Q4 report Feb. 12 and preliminary results indicate home values in most U.S. markets have continued their descent. In a recent report, Merrill Lynch predicted "housing prices will remain in free fall," declining 15 percent in 2008 and 10 percent in 2009, "with more depreciation likely beyond the forecast period," even if the Federal Reserve continues to cut interest rates.
How Homeowners Perceive the Situation
About a third of homeowners (36%) in the Zillow.com Home Value Survey said their homes had actually increased in value during 2007. Zillow's Zindex(R) data proves the contrary, showing median value declines across regions as of October 2007.
"This survey reveals that despite the data to the contrary, people either aren't paying attention to their housing market or are in denial about their own home's value," said Dr. Stan Humphries, Zillow.com vice president of data & analytics. "This likely reflects the fact that most Americans have not realized home-related losses because they're staying in their homes. Even in declining markets where a greater percentage of new homeowners are underwater on their mortgage, it's important to remember most people are not really affected by declining values unless they absolutely must sell or need to immediately refinance or withdraw equity. This has contributed to the healthy investment intent, particularly in home upgrades, despite the downward trending markets."
