Glass half cloudy

The Boston Consulting Group this week released the results of a survey in which pollsters found 55 percent of Americans think their homes would sell for more now than they would have a year ago, and 74 percent think they could sell their home within six months and get what they think it's worth.

Writing for CNN Money.com -- in a column headlined "Out of touch with realty reality" -- Les Christie says the "overconfidence" of home owners "doesn't jibe with the findings of most home-price indices, which point to lower median single-family house prices of about 2 percent nationwide."

But before we go calling people overconfident, does a 2 percent decline in average home price mean that prices haven't gone up for 55 percent of Americans? Not necessarily.

We know prices in the last year are down a lot more than that in some markets, were stagnant in others, but that they also kept appreciating in a whole bunch of places.

If you look at first quarter '07 median sales prices of existing homes broken down by metropolitan statistical area, 83 MSAs saw prices go up or stay unchanged in the last year, while 63 were down. That doesn't tell us what we want to know, because the population of each MSAs varies, but it leaves open the possibility that if 55 percent of Americans think their home has appreciated in value in the last year, they are not necessarily delusional. 

I don't know, does anyone slice and dice home price numbers that way -- like the stock market's advancing versus declining issues?

The survey also asks people to look two years into the future, and 52 percent said they think the housing slowdown will be over by then. PMI Mortgage Insurance Co., which does a fairly sophisticated analysis of the probability of prices falling in the next two years, recently predicted that only 15 of the top 50 metropolitan statistical areas are facing a 50 percent or greater chance of a price decline in the next two years. Eleven of the 15 MSAs at greatest risk of price declines were in California and Florida, states that saw some of the biggest run-ups in prices during the boom.

Maybe the people surveyed by BCG are out of touch with reality, but somebody needs to dig up some better numbers to prove that conclusively.

Oh yeah -- if 45 percent of people DON'T think their homes have appreciated in the last year, isn't THAT a little ominous?

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