In my business perception does not always match up with reality. A research company did a survey of home owners recently and 62% of the owners surveyed believed their home values have increased or held steady in the past year. In reality 73% of U.S. homes have lost value.The survey went on to show that 75% of these homeowners expect their property to increase or remain level in the next 6 months.
This survey had my heart pause. How could so many people not know that their house had declined in value? Then I said to myself, "Silly me, think of all the owners you meet with who expect their house to be listed higher." It is a challenge as I meet with people to help them list their house and arrive at a realistic list price. The seller will look at their tax value and expect the property to be worth 10-15% more than that amount. The tax evaluations are on yesterday's values and have not been adjusted to reflect the declining market. I don't want to be the "bad person" here, but I do find it necessary to bring a reality check to the meeting.
Lower values do not mean home owners have lost money, if they purchased five years or greater. On paper the value might not be there, but nothing fell out of their pockets. Owners that bought high, refinanced, or have home equity loans on their properties are suffering. Using our houses during appreciating periods as a money maker is fine. What is dangerous is when we actually use that money and then the value drops. We no longer have that money that we thought was there for us.
Growth in value of our houses will return. It will be slow in coming and the growth will return to about 3-5% a year. That is normal for the Twin Cities. Normal is good. We found out the ugly truth about the roller coaster ride of "crazy appreciation."
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