Those with smaller homes and down payments least confident
Over the past three years, national home prices have grown between 5% and 7% annually, according to CoreLogic's Home Price Index. However, it has also been reported that this national growth rate was uneven. While scorching markets like Seattle consistently report double-digit home price growth, there are markets such as Las Vegas where less than 1% of homes in the city have regained their 2007 peak value.
What is often overlooked amid the recent three years of housing boom news is that only 52.6% of all homes in the U.S. are estimated to have increased value post-2008 housing crisis, according to Zillow.com. Among the last generation of hot housing markets such as Orlando, Riverside, CA, Phoenix and Miami, less than 10% of all homes have regained their 2007 peak value.
Homebuyer confidence in retaining house value is mixed
It is not a surprise that a minority yet still sizeable share of homeowners in ValueInsured’s latest Modern Homebuyer Survey express less than fair level of confidence that they could sell their home for the same or more than what they paid for. Overall, homeowners’ confidence level is high. Nationally, 72% of all homeowners are confident their home has retained or increased in value since they bought it. There are, however, segments of homeowners that show lower level of confidence.
Among suburban homeowners, 67% say they have fair to absolute confidence their home can be sold today for the same or a higher price than what they paid for, while more than 1 in 6 (17%) say they lack the confidence their home has retained or increased its value.
Earlier this summer, Fitch Ratings estimated two of the country’s most overvalued markets are in Texas. Homes in San Antonio and Austin are estimated to be overvalued by 19% and 17%, respectively. Austin, where median home prices are estimated to have risen 64% since that market bottomed out in summer 2011, is now listed as approaching “cool” or swinging back to a “buyer’s market” by Zillow research. According to ValueInsured’s survey, 2 in 3 homeowners in Texas (66%) are confident they can sell their home today for the same or more than what they paid for, while 20% have negative confidence their home has retained value since their purchase.
In Connecticut, where the housing market has struggled in recent years after a string of corporate headquarters' departure, 1 in 3 homeowners say they have negative confidence their home has retained or increased its value.
Among current homeowners who plan a budget of $250,000 or less for their next home purchase, 38% are less than fairly confident their current home has retained value. Among homeowners who plan to put down 5% or less down payment on their next home, only 46% express at least fair level of confidence they can sell their current home for same or more than their original purchase price, whereas 1 in 3 believe they will sell for less than their original purchase price. It is not known if there is a casual effect, but it makes sense that homeowners who expect to sell at a loss may plan a lower budget or down payment for their next home.
These survey results and home price data outlined above serve as a reminder that while positive housing news has dominated the headlines, what might have been overshadowed are a smaller yet obviously important segment of homeowners who may not as readily resonate with the bullish headlines.