Route To Recovery
A team of Reuters journalists toured America in November 2009 to examine the impact of the recession and the prospects for recovery. Here's what they uncovered. Full Article | Full Coverage
Fewer homeowners say their homes appreciated: survey
NEW YORK (Reuters) - The number of U.S homeowners that thought their homes increased in value has dropped sharply over the last two and a half years, according to a Reuters/University of Michigan survey published on Friday.
Just 29 percent of homeowners surveyed in January said their homes appreciated in value. That is in stark contrast to August 2005 when 76 percent of homeowners reported gains in their home's value. That percentage fell to 65 percent in January 2006 and then 52 percent in January 2007.
Half of the total decline of 47 percentage points was recorded in 2007, and nearly all of that deterioration took place in the last half of 2007. Recent declines have been particularly steep among homeowners residing in the Northeast as well as for consumers who owned moderately priced homes.
When asked about prospects for the year ahead, homeowners were somewhat less inclined to expect either declines or increases. More homeowners expect no change and the average expected change among all homeowners is exactly zero for 2008.
While declines during the past year were concentrated among residents of the Northeast, anticipated declines during the year ahead were more frequently reported by residents of the West.
"The data indicates an association between falling home prices and expectations of a slowing economy and greater job losses during the year ahead," the survey said.
A rising unemployment rate was anticipated twice as frequently among homeowners that expected declines as opposed to increases in the value of their homes. Nearly three-fourths of those who expected home price declines also anticipated that the economy would weaken in 2008. Outlooks for interest rates and inflation, however, were unaffected.
A telling sign that consumers expect an extended period of housing weakness is the gradual but steady decline in home price expectations over the long term. The expected average annual rate of change in home prices over the next five years fell to 2.7 percent in January from 3.9 percent in the second quarter of 2007.
The data does not indicate that consumers expect declines to persist, but that consumers expect the rate of increase in home prices to slow considerably in the years ahead.
(Reporting by Julie Haviv, Editing by Chizu Nomiyama)
