James Temple, Chronicle Staff Writer
Wednesday, August 6, 2008
A home is advertised for sale in Stockton in May 2008.
(08-05) 21:14 PDT – It could never happen to me. That’s the common attitude whether the subject is shark attacks, black market organ theft or, apparently, housing price declines.
Despite plummeting values across the nation, 62 percent of homeowners believe their property’s worth has actually climbed or stayed the same during the past year, according to a confidence survey commissioned by real estate Web site Zillow. In reality, the market price on 77 percent of properties has dropped and only about 24 percent have risen or held firm, the Seattle company estimates.
Residents of western states are only a little less self-deluding. Fifty-six percent acknowledge the market value of their home fell, while 44 percent believe it maintained or gained worth. The reality is closer to 88 percent and 12 percent, respectively, Zillow said.
“The results are pretty eye-opening,” company spokeswoman Amy Bohutinsky said. "They’re taking the attitude of, ‘not my house.’ "
The gap reflects the mind’s capacity for denial when, say, evidence suggests someone’s largest single asset lost 20 percent of its worth in a year, said Kit Yarrow, a consumer psychologist at Golden Gate University. Assisting the denial is the subjective nature of home values, which - unlike most products - don’t come in shiny boxes stamped with a price tag, she said.
“When things are that emotionally powerful and hard to fathom, it’s easy for people to say, well, it’s happening over there, but it’s not happening in my neighborhood,” Yarrow said. “We do that in many areas of our lives, so it’s not that surprising that we’d do it in our homes.”
There are isolated pockets of relative strength in the marketplace, notably the high-end sector and coastal urban markets, but even in those categories outright price gains have been rare during the last year. Nearly every aggregate measure of housing prices nationally and locally has shown declines.
A 10-city composite index of values in major markets dropped 16.9 percent compared with a year ago in May, according to S&P/Case-Shiller. Prices fell 22.9 percent in the San Francisco metropolitan area, defined as Alameda, Contra Costa, Marin, San Francisco and San Mateo counties, making it the sixth worst-performing region in the country.
Each of the Bay Area’s nine counties saw double-digit median price declines in June, compared with a year earlier, according to DataQuick Information Systems.
For owners who plan to stay put for the next five or so years, a skewed view of their home’s current worth doesn’t really matter, Bohutinsky said. Those planning to sell or refinance in the coming months, however, “should really be paying attention and figuring out what sort of impact this has on their own home and taking a dose of reality,” she said.
The Zillow survey of 1,361 homeowners, conducted by Harris Interactive, didn’t break out figures for California or the Bay Area specifically. Malcolm Kaufman, a Realtor with McGuire Real Estate who focuses on San Francisco, said local sellers are generally more informed and realistic about the condition of the market.
That said, he sometimes finds it difficult to convince clients to list their homes at slightly below the going rate, which he believes is the best tactic for generating multiple offers in an environment where people are looking for bargains.
"It’s human nature (to say) ‘My home’s worth a million dollars, I want to get a million,’ " he said.
Among the survey’s other findings:
– Seventy-five percent of U.S. homeowners believe their property value will increase or stay the same over the next six months, but only 58 percent believe the same is true for their local market overall.
– Eighty-two percent expect to see more or about the same number of foreclosures in the next six months, but 48 percent think that homeowners who find themselves in trouble because they took out loans they couldn’t afford shouldn’t receive government assistance.
E-mail James Temple at email@example.com.
This article appeared on page C - 1 of the San Francisco Chronicle