American homeowners are much more realistic about their own homes' values than they were one year ago, but are more optimistic about the future than at any other time in the past year. More than half (60 percent) of homeowners believe their own home lost value in the past 12 months, according to the Zillow Q2 Homeowner Confidence Survey. In reality, 83 percent of homes lost value during that time, according to Zillow's second quarter Real Estate Market Reports.

But homeowners are more optimistic than ever about the future values of their homes, with 81 percent of homeowners believing their own homes' values will not decline in the next six months - the highest percentage on record since the first quarterly Homeowner Confidence Survey, which was fielded in the second quarter of 2008. Meanwhile, only 19 percent of homeowners believe their own home will decrease in value over the next six months.

Homeowners' relatively more realistic perceptions of home values over the last 12 months resulted in a Zillow Home Value Misperception Index of 13 (an Index value of zero would mean homeowners' perceptions were in line with reality), down significantly from a Misperception Index of 32 one year ago.

Although homeowner perception in the second quarter shifted closer to reality when compared to 12 months ago, the Misperception Index rose from six in the first quarter. In both Q1 and Q2, 60 percent of homeowners said their home had declined in value over the past year. But with 83 percent of homes actually losing value in the second quarter compared with 81 percent in the first quarter, the gap between perception and reality increased.

The survey also indicated that many homeowners could be waiting on the sidelines to sell. When asked about future plans to sell, 29 percent of homeowners said they would be at least "somewhat likely" to put their homes on the market in the next 12 months if they saw signs of a real estate market turnaround, creating "shadow inventory" that could slow a recovery.

"Hope springs eternal for the U.S. homeowner," said Dr. Stan Humphries, Zillow chief economist. "While their perceptions of past declines in their homes' values have gotten more realistic over the past year, each quarter homeowners express the opinion that the worst is behind them. Unfortunately, that has not been the case thus far and it's far from clear that it's the case today. Despite some signs of slowing depreciation in many markets in the second quarter - the height of the 2009 home-buying season - there are many market fundamentals that will challenge home prices in the near-term: high for-sale inventory levels, foreclosures, negative equity, and price-to-rent ratios that still aren't back to historical levels yet."

Homeowners in the West are again the most realistic about their own homes' values, with a Misperception Index of seven, but 81 percent of them believe their homes' values will increase or stay the same in the coming six months. Southerners were farthest from reality, with a Misperception Index of 18, and were even more optimistic about the future of their homes' values, with 83 percent saying their homes' values would increase or remain the same.

Recent home sales no longer the primary indicator of a real estate turnaround

Homeowners who are at least somewhat likely to put their home up for sale in the next year said improved local employment statistics will be a primary indicator of a real estate turnaround (63 percent), a change from last quarter when most homeowners said that increasing home sales would indicate a turnaround. Recently reported statistics from the U.S. Department of Labor and Statistics show unemployment at 9.4 percent nationally in July compared to 9.5 percent in June.