So-called shadow inventory, which is essentially the stock of homes that would come onto the market assuming things turn around, could keep home prices down a lot longer.
Supply is already a concern, given the lack of buyers and the number of homes currently on the market, but if banks and individual homeowners begin unloading their properties at the first sign of a recovery, it could exacerbate matters.
“With almost a third of homeowners poised to jump into the market at the first sign of stabilization, this could create a steady stream of new inventory adding to already record-high inventory levels, thus keeping downward pressure on home prices,” said Zillow vice president of data and analytics Dr. Stan Humphries, in a statement.
Interestingly, only 60 percent of current homeowners believe their property has lost value during the past 12 months, while in reality it’s closer to 80 percent.
Another 18 percent felt their own home gained value in the past 12 months, and 22 percent think the value remained unchanged.
Homeowners seem to be coming to terms with reality, though 74 percent believe their home will not decline in value in the next six months, effectively calling a housing bottom.
“While homeowners are now more realistic when looking backward, they are still pretty starry-eyed when looking forward with three out of four homeowners believing that their own homes’ prices will increase or be flat over the next six months,” added Humphries.
“Unfortunately, there are few markets we expect to perform this well.”