Most owners say their homes depreciated: survey

By Julie Haviv

NEW YORK (Reuters) - A record number of homeowners thought their homes depreciated in value in August, according to a Reuters/University of Michigan survey published on Friday.

Among all homeowners surveyed, 46 percent reported declines in their home's value, twice the level recorded in August of last year and above the previous record of 41 percent set in July.

There was a considerable disparity across the regions, however, as 60 percent of Western homeowners reported declines compared with 34 percent of Southern residents. A year ago the difference was just as sharp, but at about half the levels, with 33 percent of Western homeowners reporting declines compared with 15 percent of Southern residents.

While consumers more often expected continued declines rather than increases in their home's value during the year ahead, the extent of the expected decline has continued to narrow. Homeowners expected their home to decline in value by 0.3 percent during the year ahead, down from a peak of 0.9 percent in the second quarter of 2008.

"There were sharp differences in year-ahead home price expectations depending on whether home prices had increased or decreased in the past year," the survey said.

Among the 46 percent who reported past home price declines, an additional decline of 2.4 percent was anticipated. Among the 21 percent that reported an increase in their home's price during the past year, an additional gain of 2.7 percent was expected.

"Importantly, home price expectations over the next five years also improved," the survey said.

Homeowners anticipated an annual gain of 3.1 percent during the next five years, up from 2.3 percent in July, returning to the levels recorded in late 2007.

"Given long-term inflation expectations, however, this implied that consumers expected no real gains in home prices over the next five years," the survey said.

Home purchase plans remain quite negative, which is not because of negative views about buying conditions, but because of the most negative views of home selling conditions ever recorded, the survey said.

Among all homeowners, 93 percent viewed the current selling conditions unfavorably in August, unchanged from July, but up 76 percent from a year ago and well above the low of 18 percent recorded in August of 2005.

These negative views are based on their reluctance to sell their home at reduced prices, with more than three-in-four of all homeowners citing this reason.

(Reporting by Julie Haviv; Editing by Kenneth Barry)