Home Values Survey Shows Discrepancy Between Sellers’, Buyers’ and Agents’ Perceptions of the Housing Market

Homegain, a real estate related website, recently released the results of an extensive nationwide survey of Realtors on home prices and values.  The results show generally that  Realtors are of the opinion that home sellers believe their homes to be worth more than Realtors and homebuyers believe that they are worth.

A recent Zillow poll showed that sellers were no longer ‘in denial’ regarding the U.S. housing slide. The latest HomeGain survey, however, underscores that while homeowners may be aware of falling home prices around the country, many believe that the slide doesn’t apply to their homes. Our survey shows that homebuyers and Realtors are telling homeowners their homes are worth considerably less than homeowners think they are.  I will outline the results of the survey and provide my interpretation of the results.

1. On average, in the last year do you think your homeowner clients home values have:

NATIONAL REALTOR RESULTS

Home Values Survey

Interpretation: 90% of agents believe their clients’ homes have lost value in the last year.

2. On average, what do your homeowner clients believe that their home is worth?

REALTOR NATIONAL RESULTS

Home Survey Results

Interpretation: 49% of homeowners believe there homes are worth 10%-20% more in value while 14% believed their home to be 20%-30% higher in value.  An additional 4% believed their home had gained 30% or more in value over the past year.  This totals up to 67% of homeowners believing their home increased in value in the last 12 month.  When you add an additional 14% who believe there home has not lost any value, the result is an amazing 81% of homeowners do not believe there home value has been impacted by the current market.  This is despite all of the information about excess inventory and foreclosures driving down prices and the fact that the Case-Schiller index of home prices showed an 18% drop in prices nationwide.

Here are some comments from agents who participated in the survey:

“Sellers know that prices have fallen but that somehow doesn’t apply to them because they have “upgraded vinyl” or some such nonsense. In other words, their house has the golden doorknob,” said a New Jersey agent.

“Sellers have got to be realistic in their expectations. An overpriced home in these times does nothing, no showings, no offers just whining from sellers that it’s all someone else’s fault that the home hasn’t sold. Sellers need to get real.”

“The neighborhood I live in and market, are $500,000 to $2,500,000, they tend to think their homes are still more than what the current market can bring.”

3. How do your homebuyer clients feel homes are priced?

NATIONAL REALTOR RESULTS

Home Values Survey

Interpretation:  When agents were survey about their buyers, 59% said that their buyers felt homes were overpriced with 18% believing the home was priced fairly.  Only 22% felt that homes were under-priced to any degree.

So, 59% of buyers feel homes are overpriced while 81% of homeowners felt their homes had maintained or increased value over the same period. It’s not hard to see why homes are sitting on the market and buyers are making “low ball” offers when their perceptions are so different.

More Agent Comments:

“Differences between seller and buyer are still too great – they just don’t get it yet.”

“Homebuyers do not have the funds to purchase homes, values for first-time buyers on average $150,000 to $200,000 with a 3.5% down, plus closing cost on average combined is about $11,000 with pre-paids.”

“Our market is great for buyers looking for a deal and that’s what they are getting with the foreclosures and short sales (if they close). Owner occupants cannot compete and are unwilling to list at the bank prices.”

“The buyers are afraid to buy too soon.”

“The homes that have been selling (aside from short sales and foreclosure/bank owned homes) are homes that are priced relatively low and have good appeal. Buyers are in now hurry and ask for everything.”

“Several home buyers are waiting to purchase as they feel prices will decrease.”

4. In the next six months, do you think the values of homes in your market will:

NATIONAL REALTOR RESULTS

Home Values Survey

Interpretation:  53% of agents believe home values will decrease over the next months from current levels.  I believe our market is close to the bottom in terms of price decreases but  you must be priced correctly for the current market.

Conclusion

This survey shows that we have a huge disconnect between sellers and buyers in terms of home values.  And, because of the excess amount of foreclosures and short sales, buyers have become used to seeing home prices declining.  In the north Atlanta area, I have not seen any market that has not been impacted by excess inventory and distressed sales.  I believe that sellers are going to have price very realistically in order to attract buyers and compete effectively.

This is also supported by the fact that February 2009 home sales rose 5.1% but at the expense of home prices which were down 15.5% from February 2008.   Read the article here.

See full HomeGain survey here.