Homeowners finally facing reality: Yes, your home has lost value
Just six months ago, homeowners across the country seemed to be suffering a mass delusion: While they all knew that home values were dropping in most major metropolitan areas, none of them seemed to think their home was losing any value.
It was a bit like the way people regard their local senators and representatives. While most people think Congress is doing a terrible job, they think their own local legislators are doing just fine.
See the problem here? It doesn’t make sense.
Well, it appears that homeowners are finally facing reality. According to a new study by Zillow.com, an online real estate marketplace, they’re finally accepting the fact that, yes, their own homes probably last value in the last year.
According to the Zillow report, about 57 percent of homeowners say that their home has probably lost some value during the last year. That may still sound like a bit of denial; After all, far more homes than that have actually declined in value during the last 12 months. But it’s better than the numbers Zillow dug up in its previous survey.
In that one, only 38 percent of homeowners said that their homes were losing value. In reality, 76 percent of homes lost value in 2008.
See the disconnect here?
Of course, no one wants to admit that their homes have dipped in value. We all want to think of ourselves as savvy dealmakers, as folks who’d never buy anything but the perfect home.
Unfortunately, no one expected home values to fall so drastically and on such a widespread basis. Thing is, though, a home’s value means little if you’re not selling. If you plan to live in your house for at least five more years, you probably have little to worry about. In five years, the odds are good that your home’s value will have recovered, and that you will make a solid profit when you sell.
The problem comes when people expect to make a ton of money in a short period of time from their homes. Residential real estate wasn’t designed to work that way. It’s only been in the last decade that homeowners have become spoiled enough by an uprecedented run-up in housing values to expect quick cash from owning a home.
A home is designed to provide shelter, to provide its owners with a place to raise their families, to make memories. And, yes, homes have also historically proved a solid investment. But no one ever claimed that homes were supposed to nearly double in value every three or four years. That was a fluke that will probably never happen again.
So if you own a house, and you’re not ready to sell, don’t worry about its worth. Give it a time. It will increase in value.
