Daily headlines about the declining real estate market are helping to convince more homeowners that yes, they too lost equity as a result of the market meltdown.
A new survey from Zillow shows that 57% of United States homeowners think their homes lost value in the past year -- up from the 38% who had thought their homes were losing value in the second quarter of 2008. But according to Zillow, we're still not being realistic enough: That site's data (flawed though it is) suggests that 76% of homes declined in value. More interesting data on homeowners' expectations for 2009:
30% of homeowners think their home's value will decrease
43% think their home's value will stay the same
27% think their home's value will increase
The increasing willingness of homeowners to recognize that their homes aren't worth as much as they used to be is a big part of what is driving increases in homes sold in many parts of the country: Sellers are more realistic on price than they used to be, and that may help to clear out excess inventory.
More realistic pricing expectations are helping to bring home buyers in off the sidelines and the ever-spinning National Association of Realtors reports (subscription required) that first-time home buyers made up 41% of all buyers at the end of 2008, up from 36% in 2006. But before you get too excited: Something like one in six homeowners are underwater on their mortgages -- meaning that they are essentially trapped in their homes and can't sell and buy a new one. The only people who have cash to put down on homes are people who didn't buy a home a few years ago! So that could explain why a lower percentage of buyers are repeat buyers. Of course reporting on young families having a chance to buy a first home is a lot more fun than talking about retirees trapped in homes that are no longer adequate for their medical needs, so that's what NAR (also known as the Agitprop of Housing) focuses on.
Still, this market downturn is a great thing for renters who have been saving religously and haven't had their portfolios, earnings or credit impacted by the tanking economy. But how big of a population is that really?