The Real Deal Miami

Survey: 42 percent of buyers overestimate home appreciation

November 01, 2011 09:47AM

A sizable number of prospective buyers overestimate the potential for home value increases, an ongoing survey of online users by real estate website Zillow.com found, according to the Sun Sentinel. Forty-two percent of those participating in the Zillow.com survey overestimated the rate at which home values increase, believing that homes typically appreciate by 7 percent annually.

In reality, the survey explains that homes values typically rise between 2 percent and 5 percent each year and Stan Humphries, chief economist for Zillow, is worried about the consequences of a misinformed public.

“It’s troubling that we’re still in the midst of one of the worst housing recessions in history, and yet prospective buyers continue to have such high expectations for home value appreciation,” Humphries said.

He explained that the people who overestimate the rate of home value appreciation are more likely to look into buying even when renting may be the better financial choice. The survey also found that over a third of those surveyed believed homeowner’s insurance to be optional and over half did not fully understand the process by which a buyer comes to actually own a home. [Sun Sentinel]