It has been long time coming. The present housing and mortgage convulsion has been tough on everybody, spare none. Mortgage borrowers find it hard to get approved, thanks to ever-tightening underwriting guidelines. Tenants living in rental homes are being evicted when the landlord gets foreclosed on. The most drama, though, has been endured by homeowners who have been watching helplessly as their property values are on a steady slide south. Some areas, like Las Vegas, numerous California communities and much of Florida, have been hammered while others have suffered smaller declines.
During the recent past many home sellers have been slow in accepting the unpleasant fact that they can't get for the house anything close to what it was worth three-four years ago. They were in denial, as they say.
But now they are coming around in increasing numbers to face the cold truth. Zillow.com ran a study in the fourth quarter of 2008 called Q4 Homeowner Confidence Survey. According to it 57% now think that the price of their home dropped in 2008, when as recently as in the second quarter only 38% believed so. The significance is that they are starting to buy into the value loss and as a result will price listings more realistically than before. In a small way this will help move inventory faster and play a positive role in the current real estate correction process. Anything to push it along is good.
The study does mark an improvement, but there is still further to go before everybody is on board. Zillow's Q4 Real Estate Market Reports states that 76% of homes in the country experienced a value decrease in 2008. So, there is a gap that needs to be closed. Obviously the reality is beginning to sink in, although there still are holdovers that just won't let go.