“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.”
[Editor’s Note: And no, the irony hasn’t been lost on us.]
Homeowners delusional on value of property [SocketSite]
Luckily The Sellers Weren’t Looking At Their “Zestimate” [SocketSite]

Recent Articles

Comments from “Plugged-In” Readers

  1. Posted by diemos

    But, “It’s different here” (R)

  2. Posted by urban_angst

    And we all know how accurate Zillow’s numbers are…

  3. Posted by SFhighrise

    Seems that owners in SF are more self-deluded than other markets in the West. I don’t see listings on Craigslist being lowered in line with reality. Perhaps in another year or two, as the economy continues to worsen, people will become more realistic. That is the time that I will buy.

  4. Posted by gmh

    urban_angst – The numbers are not based on Zillow’s data – Zillow just commissioned the survey. Or are you just trying to make an ad hominem attack?

  5. Posted by Rillion

    Well count me in the “not self-deluded” catagory. I just sent an appeal yesterday to the Assesor’s office appealing their claim that my unit has increased in value since I bought it in February of 2007.
    Unfortunately the system is clearly stacked against the taxpayer (big shock there) since it is hard to find good comp data in the time frame they demand and actually paying for an appraisal would cost me more then I would save in taxes for the year.

  6. Posted by urban_angst

    gmh – Now that’s really special (and actually proves my point). The irony here is that your citation of an ad hominem attack would mean that we should discount the argument exclusively because of the source. In a way I am saying that – but not because its a real estate website. I’m just saying it because their prognosis data is crap.
    In fact, if the “numbers are not based on Zillow’s data”, that means Zillow can’t even trust their own data to determine the “reality” of “market value”. Har. Har.

  7. Posted by San FronziScheme

    Perhaps in another year or two, as the economy continues to worsen, people will become more realistic. That is the time that I will buy.
    SFHighRise,
    Bear markets has a funny way to work. People who got stuck in denial for way too long are likely to get to their senses at the worst possible time, lowering their expectations when all buyers have vanished into thin air. Which means that even lower expectations at official market price (excluding foreclosures) won’t move their houses. And they have to lower their prices even more when they get into dire straits and HAVE TO sell. At this level, distressed properties sell at bargain basement prices and get the lion’s share. This is happening today in some specific bedroom communities of the East Bay and this is where you’ll probably find the deals of a lifetime.
    I don’t know if this will ever apply to SF, though apart from limited areas/properties. This market is definitely a different animal. I wouldn’t hold my breath on seeing SF affordable again to the mere mortal like 10 years ago. New money, old money, stupid money, big money. They are all converging into a few bright spots and SF has a few of them.

  8. Posted by anon

    Unfortunately the system is clearly stacked against the taxpayer (big shock there) since it is hard to find good comp data in the time frame they demand and actually paying for an appraisal would cost me more then I would save in taxes for the year.
    I was able to contest my valuation from about 2002-2005 (yes, some prices went down even then–at one point I was down about 100K) without much of a problem. I found the assessors office to be pretty reasonable. Try calling them instead of going through the hearing process.

  9. Posted by sparky

    SFscheme,
    I agree with you that it is the distressed and rundown properties that will drop in price the most, while the nicer stuff stands firm. I also think there will be more run-down stuff on the market as “flippers” can’t get mortgages on them as second homes and what have you. Does that really drive down the price though? It seems like your average homebuyer doesn’t want to deal with that type of property.
    Also, count me in the delusional category. My value has gone up in the last year. I know this becuase 3 houses sold on my block in the last few months all smaller than mine, not as nice, but for more money.

  10. Posted by spencer

    In my opinion, this is why the inventory ahsn’t skyrocketed. people still think their homes are going up in value and the credit crisis is temporary. Therefore, they will be able to sell at a higher price ina couple of years.
    That 50%+ cant come to grips with the fact that their homes may be worth about as much in 2011 as they were in 2001

  11. Posted by fluj

    You could just as easily say that most people who buy like living here and would rather hold for now than take a slight loss, break even, or make a slight gain.

  12. Posted by Satchel

    This refusal to accept the new pricing realityis what I am seeing in my very limited surveys from my new digs in Tiburon. Stubborn refusal to sell at a “loss” by buyers who bought within the least year or two (usually the buyers want to at least cover their commission, so in at least a few of them the situation is hopeless unless they face the music).
    Meanwhile, there is a lot of chatter in my limited circle about just how much properties have fallen 10-20 miles north of here (San Anselmo and, especially, Novato). It seems to be that most people feel that prices have fallen 20-30% apples to apples up there, and it is not hard to find worse examples in reasonably ok neighborhoods (or better examples, I guess, depending on your view). I can’t see how fall down 3/1 shacks in the flats of Tiburon will still command $1M+ prices when decent 4/2 expanded ranches in decent established Novato neighborhoods are already down to ~$400K and still dropping.
    Every time I jump on the 101 North I see the electronic sign (“Novato 12m[inutes]”). 12 minutes to pay 1/3rd the price for 1.5 times the space? I think a lot of people will be opting for private or Catholic school up there rather than killing themselves to live in Mill Valley or Tiburon….

  13. Posted by San fronziScheme

    sparky,
    I was a buyer of distressed properties in Europe from 1994 to 2002. The best deals were real dumps, often former dealer/junkies squats with crap and dead rats. The places were structurally sound, though. Easy to redo once the leeches were gone.
    Demand for these properties was non-existant which compounded on itself. No demand means no will to redo the places, which means more disrepair, landlords not paying HOA fees and neighbors stuck with the bill and less willing to maintain the buildings.
    All of this fed on itself and prices gradually went down. 5% a year from 91 to 94, then 10% a year in 95, 96 and 97. A slo-mo train wreck. At the bottom, prices had lost 50% from 91 and locally more than 60%. In 2002, prices had gone back to 1996. In 2004 we were back to 2001. That was a lost decade. Flippers from the late 80s who hadn’t sold before 1992 were really really sorry.
    But financing was there, the renters were there, the economy was not too bad.
    What the hell had happened? Psychology and the “I won’t fall for it twice” from flippers who were losing their shirts? Or maybe the “no-brainer investment of the day” had switched to something else.

  14. Posted by anon

    Or that maybe some people need a place to live, like their current situation, and do not want, or need to sell. Believe it or not, not everyone was buying property to make a quick buck.

  15. Posted by sparky

    I don’t think that is why inventory “hasn’t skyrocketed”. Partly, it has to do with the nature of surveying. I think my value is up, as I stated above, but I am not looking to sell until my 2 year old finishes 8th grade at the school we walk too. So what part of the people in the survey really are holding onto there house for the value to go up and then sell vs. people who think the value has gone up but it doesn’t matter if they are delusional because they aren’t selling anyway.

  16. Posted by San FronziScheme

    I meant in 2004 we were back to 1991 prices, inflation-corrected.

  17. Posted by Satchel

    San Fronzi,
    I always like your stuff. You should have seen the situation in parts of the Bronx in 1991-94ish. Actually pretty decent working class neighborhoods. Many of these small (4-6 unit apartments) were selling for 2x GRM (24x monthly rent). Im not kidding.
    Rent control had something to do with it, but not much (rent levels were decent given the valuation, but many people remember the absolute destruction that rent control wrought in the late 70s through mid-80s there). People who bought then made a killing.
    (I was a little young then, and chasing a different dream.)
    As this credit bubble wipes out, I am sure that someone like you will be able to pick up nice working class properties in Daly City along Mission for 50-60x monthly rent roll. Keep the faith!
    (BTW, sometime I have to explain to you how there is no distinction between “money” dying and “credit” dying – after all they all go to heaven after the credit bacchinallia – because there is NO distinction between money and credit in our system. None, but that’s a topic for a different thread….)

  18. Posted by sparky

    SFS,
    There will be investors; and run down units for cheap count me in on that. But the credit will be a bigger issue for the “flipper”, and this will mean SFHs not getting rehabed and left to the homeowner to buy and fix up (and deal with permits and contractors). It will decrease inventory of finished homes and drive up the price on the ones that are done.

  19. Posted by San Fronzischeme

    Satchel,
    24x monthly rent beats everything I have seen or done. The best I could do was 15K Euros for 400 Euros in rent in 97. With fees, that’s around 40x rent. I sold the place in 2005 at 200x rent :-P

  20. Posted by FSBO

    The outlying areas that are in clear decline are creeping closer to SF and southern Marin. The declines in Novato are astounding and accelerating. And, as Satchel points out, Novato is only 12 minutes away from southern Marin (well, except with the grain during rush hour).

  21. Posted by michiko

    Obviously you know that Tiburon-Mill Valley-Sausalito is a different market than further north. Ever driven to or from Novato or Petaluma in rush hour? Going over the hill just beyond Tiburon Boulevard is where the blockage starts, and the long ongoing highway work in San Rafael is not going to improve that a whole lot.
    Employment continues to be centered around the City, so anyone who has to commute will have higher gas costs and drive times. This could change as Hamilton Field gears up its renewable energy businesses and more jobs get more local, but that’s years in the making.
    That said, I’m seeing local businesses (including physicians and other services) fleeing the high cost areas and moving to Terra Linda. The severe weakening in Novato is also allowing more young families to get a foothold there.
    Very southern Marin is weakening somewhat, but I really don’t see that it’s going tank like Novato.

  22. Posted by San Fronzischeme

    sparky,
    I am still in the learning phase for US property but I’ll be ready to jump as soon as I’m comfortable enough with the numbers.
    I was seriously considering scooping up cheap property this year but one main issue I had was the structural issues of many distressed places.
    The numbers really have to be compelling to make me want to jump in.

  23. Posted by sparky

    I’ve tried to jump in on compelling stuff, but I keep getting out bid.

  24. Posted by lolcat_94123

    So you can have your property taxes lowered if the market goes down, but nothing changes when the market goes up, until you sell, when the next fool gets locked in. What kind of state are we running?

  25. Posted by anon

    So you can have your property taxes lowered if the market goes down, but nothing changes when the market goes up, until you sell, when the next fool gets locked in. What kind of state are we running?
    No, it’s usually just a 1 year adjustment, you have to ask for it every year. And, in fact, property taxes DO go up every year, even under prop 13 (like 2%). Not much, but still.

  26. Posted by urban_angst

    No va to. As in “you won’t go there”.

  27. Posted by Lance

    “24x monthly rent beats everything I have seen or done. The best I could do was 15K Euros for 400 Euros in rent in 97. With fees, that’s around 40x rent. I sold the place in 2005 at 200x rent”
    San Fronzi – the Euro didn’t exist in 1997 ;-)

  28. Posted by San FronziScheme

    San Fronzi – the Euro didn’t exist in 1997 ;-)
    Sure. But it’s way easier for everyone not familiar with each older currency individual conversion rate.

  29. Posted by Max2

    Sound anything like the boiling frog syndrome?
    pop it in boiling water, it jumps out.
    leave it in water which is rising to a boil … well, you get the rest.

  30. Posted by NoeValleyJim

    I meant in 2004 we were back to 1991 prices, inflation-corrected
    Exactly. So the total run-up from 1991 to 2006 was what, 30%? Maybe 2% a year in nominal terms. Not really that big a jump.

  31. Posted by gmh

    urban_angst – I don’t think you really understand that the ad hominem fallacy is, in fact, a fallacy.

  32. Posted by REpornaddict

    OK, late to this party.
    But http://www.sfgate.com/cgi-bin/object/article?f=/c/a/2008/08/12/BULK1293VV.DTL&o=0
    of course shows that it would be much higher than 12% in SF itself.
    of course, the 44% who think their home hasnt lost value would be lower than SF itsself also…

Add a Comment

Your email address will not be published. Required fields are marked *