What do homeowners see as the biggest danger to their homes? Fire? Floods? Tornadoes or hurricanes?
Actually, it’s falling home values. According to a new insurance industry study, over half of all homeowners (58 percent) said falling property values are the biggest hazard their home faces, far exceeding more traditional worries such as fire (15 percent), tornadoes (9 percent) or hurricanes (8 percent).
“The survey results demonstrate how the decline in home values continues to undermine homeowners’ confidence in the housing market,” said Scott Ryles, CEO of Home Value Insurance Company, the Ohio-based firm behind the study. “Home prices dropped in 10 of the 20 key U.S. metro areas last month, and prices for single-family homes are down nearly 4 percent from a year ago. Homeowners clearly see the ongoing uncertainty surrounding housing values.”
American Dream or Nightmare?
One of the study’s more sobering findings was that homeowners were almost evenly split on whether owning a home is the American Dream or an American Nightmare. Fifty-two percent still believe it’s the American Dream, while 48 percent called it a nightmare.
Over half of all homeowners (56 percent) said they regularly keep tabs on estimated home values in their community. That group was twice as likely to monitor home prices as they were their own cholesterol levels.
Two-thirds of the survey’s respondents said appraised home values had gone down in their communities over the previous three years, with an equal number saying they expected no change in real estate prices over the coming 12 months. Nineteen percent said they expect further declines, while 14 percent are optimistic that prices will start rising during that time.
Mix of positive, negative signs for housing market
“The truth is, nobody knows where home prices are going, and the risk of substantial further drops is very real,” said Robert Shiller, a Yale economist and co-developer of the widely used S&P/Case-Shiller Home Price Indices. “While there are some positive signs, there are ongoing factors that are likely to keep pressure on home prices. Government policy initiatives to support the market are offset by persistently high unemployment, foreclosures and difficulty in obtaining mortgage financing.”
The study surveyed 1,005 U.S. homeowners in late September and early October.
Courtesy: www.mortgageloan.com