Slightly over half of all homeowners say their homes are worth more today than they were when they bought them, according to a new national survey conducted just before Christmas.
Most homeowners are confident they know what their home is worth, and a greater number than ever, some 29 percent, believe that they have lost value since they bought it.
An earlier Rasmussen national telephone survey conducted in early November found that just 12 percent of U.S. homeowners now expect the value of their home to go up in 2012.
The latest Rasmussen Reports national telephone survey also found that homeowners are growing increasingly pessimistic about their home equity position. The survey found that just 44 percent of homeowners believe their home is worth more than the amount they still owe on their mortgage, a decrease from 50 percent of owners in April who believed their home is worth more than the mortgage.
The survey of 690 U.S. Homeowners was conducted December 19th & 20th, 2011 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence.
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Five consecutive years of declining home values have taken its toll on the country, with homeowners shouldering the brunt of these losses. In 2010, home values fell a collective $1.1 trillion according to Zillow, but in 2011 those losses have eased with Zillow estimating that home values fell by approximately $681 billion or 5.1 percent.
Zillow states that the bulk of the losses for the year were realized in the first six months of the year, falling by $454 billion. Since then, losses have slowed and have fallen at a pace that is half that of the first six months of 2011 at $227 billion.
One hundred and twenty-eight metropolitan statistic areas are tracked by Zillow, with nine showing gains for 2011.
Offering comment on behalf of Zillow was the company’s chief economist, Stan Humphries, who stated, “While homeowners suffered through another year of steep losses, the good news is that homes are losing value at a substantially slower pace as the market works its way towards the bottom. Compared to last year when we saw sharp declines following the expiration of the homebuyer tax credits, this year we saw some organic improvement in home values, in terms of a slowed depreciation rate which resulted in a smaller total value loss for the year.”
Humphries added that the losses are not over yet noting that the “…unabsorbed pool of housing supply, dragging levels of consumer confidence, high unemployment and negative equity will continue to put downward pressure on the housing market…” and may push off the recovery until late 2012 or early 2013. A delayed economy will likely have a huge impact on next year’s general election with Barack Obama seeking a second term and a Republican hopeful working to send him home.
For homeowners who have seen their home values slide substantially since 2007, the recovery cannot come soon enough. Positive local conditions in some areas demonstrate that prices can stabilize and even rise. But prices can vary dramatically from neighborhood to neighborhood, something buyers, sellers and refinancers should consider and obtain local comps for accurate localized information.
Home values in the U.S. declined slightly in October as the depreciation rate stabilized, but the market bottom likely will not hit until sometime next year after a drop of another 2 percent to 4 percent, according to the real estate research site Zillow.
According to Zillow’s latest market report, home values fell 0.3 percent in October compared to the previous month.
On a year-over-year basis, the Zillow Home Value Index declined 5.1 percent to $147,900. Home values have fallen 23.7 percent since their peak in May 2007.
Throughout the nation, 95 of the 156 metropolitan areas covered by Zillow saw monthly home value depreciation and 39 areas showed monthly home value increases. Twenty-two areas remained flat.
There are some somewhat positive signs in hardest hit areas. In Miami, home values were flat on a monthly basis, while Phoenix and Detroit both saw monthly gains of 0.2 percent and 1.0 percent, respectively.
Only ten metro areas saw home value appreciation on a yearly basis, with seven of those cities also having monthly appreciation.
The foreclosure liquidation rate continued to decline in October, with 8.1 out of every 10,000 homes in the country liquidated. This is down significantly from the record high of 10.7 out of every 10,000 in October 2010 – just preceding the “robo-signing” controversy and investigation into shoddy foreclosure paperwork by the biggest lenders.
The term “short sales” is used to describe a situation in which a homeowner is at risk of defaulting on their loan, and the lender agrees to sell the property below the original appraisal price in order to avoid foreclosure. Most lenders do not readily agree to short sales, although exceptional circumstances such as a homeowner losing his/her job or the death of a wage-earning spouse may make some of them more open to doing so.
If a property is sold as a short sale, the lender recoups at least a portion of the original loan amount, the homeowner avoids the stress and stigma of foreclosure, and the new homebuyer gets a property below its original appraised price. If a short sale doesn’t work, then the property usually goes into foreclosure.
Short sales may be an emerging trend as the rate of foreclosure is rising dramatically across the nation.
The credit of homeowners may be impacted after a short sale, but it all depends on how the lender reports the outcome. Some lenders report a partial loan repayment as full payment of the debt due, which does not adversely impact the credit of the borrowers. Other lenders report the sale as “settled,” which adversely and significantly impacts the borrower’s credit. The other problem is that the portion of the loan amount forgiven by the lender may actually count as taxable income by the IRS.
In summary, a successful short sale has some potential positive benefits (e.g., homeowners avoid foreclosure, lenders recoup at least a portion of the loan amount, new homebuyers gets a property at below the original appraisal price, etc), but there are also many negative consequences.
Some of these potential negative consequences include: the negative impact on borrower’s credit, negative impact on the value of other similar homes in the neighborhood, and that the amount forgiven by the lender may be taxable event.
Homeowners having difficulty making their monthly mortgage payment may benefit from talking to a real estate agent who is experienced in short sales.