Despite all the negative media coverage in the real estate market, more than half of all homeowners not only say that they are confident that they know the value of their homes but also emphasize that the properties are worth more now than when they bought them[1]. According to a national Rasmussen telephone survey, most homeowners are “confident” that they know what their home is worth, and about a third (29 percent) believe that the property has lost value since they made the purchase. However, only 44 percent believe that their home is worth more than the amount they still owe on their mortgage.

While the survey itself is interesting, it also demonstrates just how awry homeowner perceptions are of the real estate market. While 56 percent of homeowners believe themselves to be underwater, in November 2011 a CoreLogic study indicated that 22.1 percent of homeowners were actually underwater[2]. Furthermore, CoreLogic analysts predicted that this number would continue to fall throughout 2012, although the decline will be due, at least in part, to a spike in foreclosures in the New Year. Even if you use the more cynical Zillow’s numbers instead, the number of homeowners actually underwater hovers around a third rather than the 56 percent who believe themselves to be submerged.

These negative perceptions and assumptions about one’s personal housing situation can lead to life-changing decisions, such as the decision to do a short sale or even default on a loan. Furthermore, they impact homeowners’ participation in the real estate market and are certainly limiting other fiscal and budgetary decisions in ways that may not be appropriate or necessary if the homeowner only knew the actual condition of their mortgage and their equity – or lack thereof. Given how significant an impact perception has on the real estate market, what should be done with these numbers? Is the tidal wave of pessimism sweeping the country’s homeowners truly warranted?

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[1] http://www.realestateeconomywatch.com/2012/01/52-percent-of-owners-homes-worth-more-now-than-when-they-bought-them/

[2] http://www.oregonlive.com/front-porch/index.ssf/2011/11/corelogic_underwater_mortgages.html