* Homeowners seen overconfident about home values in Q1
* Potential supply could threaten home prices
By Julie Haviv
NEW YORK, May 20 U.S. homeowners grew more
confident about the value of their homes in the first quarter,
but the optimism was at odds with actual declines in values,
real estate website Zillow.com said on Thursday.
The overconfidence could portend an onslaught of new supply
of homes for sale that would threaten prices.
Nationally, 50 percent of homeowners believe their home's
value declined in the past year, according to the Zillow Q1
Homeowner Confidence Survey. But in reality, 65 percent of U.S.
homes declined in value, according to Zillow's Q1 Real Estate
The numbers put Zillow's Home Value Misperception Index at
a reading of 5, up from negative 2 in the fourth quarter. A
reading of zero would indicate that homeowner perception is in
line with reality, while a negative reading means homeowners
are overly cynical.
"The specter of shadow inventory continues to loom over the
housing market, and will certainly impede an earnest recovery,"
Stan Humphries, Zillow's chief economist, said in an interview.
"Pent-up supply makes up part of this inventory."
Zillow said 7 percent of homeowners, which translates to
5.3 million homes, said they would be "very likely" to put
their home on the market in the next 12 months if they see
signs of an improving housing market.
In all of 2009, sales of existing homes totaled 5.2
An additional 8 percent said they would be "likely" to put
their home on the market, and another 14 percent said they
would be "somewhat likely."
These homeowners represent "sidelined sellers," a component
of "shadow inventory" that if materialized, could significantly
delay timing of a market recovery.
On a regional basis, homeowners in the South and the
Midwest were overly optimistic about the value of their homes,
with a Misperception Index of 14 for the South and 4 for the
Homeowners in the West and Northeast, on the other hand,
were overly pessimistic about the value of their homes. The
Western region's Misperception Index came in at negative 12,
while the Northeast was at negative 2.
"It is clear that with 7 percent of homeowners saying they
are 'very likely' to put their homes on the market with signs
of a turnaround, we are in for a saw-toothed bottom, where
inventory will begin to decrease, causing values to stabilize
and some of these 5.3 million sidelined sellers to put their
homes on the market, causing inventory to grow," Humphries
This pattern should repeat itself several times during the
next three to five years before a real recovery in housing
takes hold, he said.
(Editing by Leslie Adler)