Homeowners Pessimistic About Equity

By:: Kara Johnson | July 22, 2011

Americans are much more pessimistic about the value of their homes than housing market analysts say they ought to be, results from a new survey suggest.

Only 49 percent of homeowners currently believe their home is worth more than their mortgage, according to a new survey from the polling firm Rasmussen. By comparison, industry figures, including estimates from firms like CoreLogic and Zillow, fairly consistently peg the rate of underwater mortgages – owing more than the property is worth – at around 25 percent of outstanding primary loans.

The survey by Rasmussen marked the second month in a row that fewer than half of U.S. homeowners surveyed said they believed they were in positive equity on their mortgages. It was nonetheless an improvement from June, when only 45 percent held that view, the lowest figure the survey has ever reported. Not surprisingly, that’s also the month when several prominent reports came out with the news that home prices had fallen to new post-recession lows.

Wealthier homeowners, investors and government employees were more likely to have an upbeat view of their current home value than other Americans were, with higher percentages saying they believed they had positive equity in their home.

Overall, one-third of homeowners said they believed they were underwater on their home loans, while 18 percent were not sure. By contrast, the most recent CoreLogic study reports that under 23 percent of U.S. mortgages are underwater, with another 5 percent in “near-negative equity,” defined as one’s home being worth less than 5 percent more than the mortgage balance.

The news comes on the heels of another Rasmussen report on Tuesday that only 11 percent of homeowners expect their homes will increase in value over the coming year. That’s down from 16 percent in June, although a little more than half (53 percent) believe their home will hold its value over the next 12 months.

At the same time, fewer homeowners now expect their home value to decline over the coming year, with 33 percent expecting home values to fall, compared to 37 percent in June. The long-term outlook among homeowners improved slightly, with 37 percent saying they expect home values to rise over the next five years, up from 35 percent in June. Even so, that’s a much more pessimistic view than homeowners held immediately after the 2008 market crash, when 58 percent said they expected their home would be worth more in five year’s time.

The Rasmussen surveys involved 676 homeowners contacted by telephone in mid-July and have a margin of error of 4 percent with a 95 percent degree of confidence.

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