One in three homeowners believe home prices will fall further, though 38 percent think we’ve already reached bottom, according to the second quarter Zillow Homeowner Confidence Survey.
This is the worst sentiment about the short-term future of home values over the past three quarters.
Less than a third (30 percent) of those surveyed believe home values in their local market will increase in the next six months, down from 42 percent a quarter earlier.
“As homeowners have been so inundated recently with news of declining home sales post-tax credit, it’s no surprise that they would become more pessimistic about the future of home values,” said Dr. Stan Humphries, chief economist at Zillow.com, in a statement.
“Homeowners have become much more responsive to current market conditions than they were just two years ago, when a more typical reaction was denial.”
Despite being more realistic about their home’s value, five percent plan to sell at any sign of a real estate turnaround, which would equate to another 3.8 million homes dumped onto the market.
Inventory is already swelling given the number of distressed properties on the market, and that doesn’t factor in the so-called shadow inventory.
Add to that the terrible sales rate – just 5.2 million existing homes were sold in all of 2009, and you’ve got a problem.
These “sidelined sellers” pose more downside risk to home prices, which in turn could increase the number of homeowners facing foreclosure, putting even more pressure on home prices. Figure that one out…
As for the future, most believe their own homes’ values will either increase (27 percent) or remain unchanged (35 percent) over the next 12 months, while 12 percent expect a decline and 26 percent aren’t sure.