As home values continued to improve in some areas of the country, other areas continued to decline. This current trend is having a profound affect on homeowner confidence and in the third quarter it was very shaky. Over the past year in the Northeast homeowners were very pessimistic about their homes' values, despite the fact that the region did post the highest percentage of homes increasing in value.
According to a recent survey performed by Zillow.com, about 20 percent of Northeastern homeowners believed that indeed their own home did gain in value over the past 12 months. However, in reality, just over 30 percent of homes in that region increased in value.
Therefore, Northeastern homeowners believed that the values in their area performed worse than they truly did which is a first in the history of the Homeowner Confidence Survey.
Zillow.com keeps track of these homeowner's beliefs and has put together what they call a Misperception Index. A Misperception Index of 0 means those homeowners' perceptions are in line with what is really going on.
The homeowners surveyed in the Northeast had a misperception index of -6 based on their thoughts regarding how their area faired over the last 12 months.
The homeowners in the West were sadly the least realistic of those surveyed around the country. Here, 28% believed that their own homes' values increased over the past 12 months, but in reality, according to Zillow.com, only 17% of homes in this area actually increased, resulting in a Misperception Index of 17.
The South had an Index of 15 while the Midwest had a Misperception Index of 8.
Overall nationally, 25% of all homeowners surveyed believed that their home's value increased over the past year. However, in reality, only 22% of U.S. homes gained value.
It was also noted during the survey that homeowners nationally are more optimistic about the future of their own homes' values than at any time over the past six quarters.
Zillow Chief Economist Stan Humphries said, "Homeowners are clearly confused about the housing market, and with good reason. Home values in different parts of the country have shown varied performance in the third quarter. In the Northeast, they have shown significant stabilization. In the Boston metro area, values are even up from this time last year."
"The homebuyer tax credits have the potential to stimulate demand and bring about a bottom sooner but, even so, we are very likely to see a sustained period of negligible appreciation in real terms. It seems that homeowners are still working under the assumption of a V-shaped recovery to home values when a long, L-shaped recovery is more likely."
As home prices continue to increase in certain areas, given time, all areas will begin to see positive gains. The question remains however, how long will that take? Only time will tell.