Denial is Not Just a River in Egypt

Posted by: Chris Palmeri on August 5, 2008

denile.jpg

Perception vs. Reality was an ad campaign Rolling Stone magazine used to convince advertisers its readers weren’t unemployed hippies living in old VW campers but instead wealthy members of the establishment with nice homes in Greenwich, Connecticut.

Real estate web site Zillow.com has a survey out today that also highlights the difference between what people want to believe and what’s really going on in the world. According to Zillow’s research, 62% of Americans believe their home has increased in value or at least stayed the same in the past year. Reality: 77% of homes have fallen in value.

The site has called this the “Not My House!” sentiment and even created a Home Value Misperception Index. That’s the difference between the percentage of homeowners who believe their home increased in value and the percentage that actually did. Presently the difference is 32 percentage points.

Interestingly the number of folks in denial directly correlates to the severity of the fall in prices. In the Western U.S., where 88% of all homes have fallen in value, fewer people think their homes have increased. In the southern states, less harder hit by the housing slump, more people think their homes have increased.

Nationally 90% of those surveyed reported foreclosures in their neighborhood. But fewer than a third of all homeowners support government bailouts for their neighbors who took on more mortgage than they can afford.

Reader Comments

Queen-of-the-Nile

August 6, 2008 6:46 AM

LA is a great big freeway...
Put down a $100 and buy a car...
In a week or two they'll make you a star.....
Weeks turn into years, how quick they past..
Now they're parking car and pumping gas...
---Burt Bacharach
The fantasy-vs-reality disparity is never greater than what people perceive as the real California. Californians like to sell their lifestyle to the rest of the Nation as an easy-lay-back-sun-and-surf state. The Hollywood sign entices to California naive Easterners seeking stardom when in reality many movie studios have long disappeared or become amusement parks. The myth is so strong that some of them even believe in their own illusion. The cold reality is that the so called "easy-going" Californian is an old fashion hungry capitalist. In about 1880s, the first wave of the hungry horde rushed into California plundering and looting the native's land for gold. When the gold was depleted the second wave of opportunist even stole the land from under the local natives. Eureka! Live the California Dream! or Live the California Promise! the new landowners shouted as they found new ways to sell cheap desert land to the impressionable Easterners. No one explained to the Easterners that there's not enough water to go around in this semi-arid state. But if you can steal the land, certainly you are entitled to steal water. Hence, the mischievious story of Owens Valley, Colorado River, and thousand miles of aquaducts. Naturally, Californians refuse to display to the Nation their dirty laundry such as shown in their history that conniving thieves, murders and felons practiced the state's most cherished profession: real estate. In the pursuit of real estate acquisition, the last Chumash "Indian" died in about 1910s; Mexicans driven off precious land; Santa Ana's entire chinatown mysteriously burned to the ground and driven from the Sacramento Delta. But California landscammers would want you to believe that the "California Dream" or the "California Promise" is cool and lay-back. The reality is that California is also home to dangerous man-eating sharks, lions, homosapiens. It is any wonder that the biggest real estate bust in the Nation is California? With the help of friendly politicians, Californian's real estate fraud is exceeded only by their greed in slicing up bigger shares of the state budget as pork. After years of refinancing its debt with more IOUs on top of IOUs with easy money, the State of California thought it could live a fantasy life happily for ever after. In the midst of liquidity crisis, real estate bust and high crude prices, Califoria is now bankrupt to the tune of $15billion because it has mortgaged everything(future Lottery earnings, Tabacco Settlement, Toll roads, sales tax increase) except its capital building and it still can't pay its bills. It has below junk-bond status. The State can't even pay its government workers. Californian can't face the truth; it is in denial. This is not exactly the way the real estate scammer had planned the end. Undeterred, the majority of Californians dream-on thinking their homes values are invincible, that no matter what happens in the real world California will always be the land of milk and honey. Little do they know that financial forces of great proportion are about to destroy their foundation.

Faris

August 7, 2008 3:51 AM

Hey there, i saw the headline and thought it was really cool. Ignore the article

Brett

August 7, 2008 4:44 PM

Brett Shaw from Cyberhomes:

It's amazing to see how many people will not come to reason when it comes to their property. With all the news about the housing market downturn, why do people think that it doesn't apply to them? That is why we see homes on the market for so long right now. No one wants to lower their price.

If you enter your address on Cyberhomes.com, it will show you an "estimate" of your home's value and also the change in value over a length of time.

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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