Homeowners are deluding themselves!

October 30, 11:52 PMReal Estate Marketing ExaminerSpencer Rascoff

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My company, Zillow, released its Homeowner Confidence Survey this week which showed just how delusional homeowners are. About half of American homeowners think the value of their home has stayed flat or gone up, when in fact about 3/4 of our homes have declined in the value. People are kidding themselves if they think that their home is somehow magically immune to the housing meltdown. It's called the Lake Wobegon effect -- everyone thinks they have above average IQ, everyone thinks their baby is the cutest on the block, and everyone thinks their home is more special than it really is.

This is a really unfortunate fact because it causes us to make economically irrational decisions about our most important investment. As difficult as this might be, it's very important to think of your home objectively and be dispassionate about home prices.

Other fun facts from the survey:

• people in the West were less deluded than in the northeast
• Obama supporters are more realistic about the value of their home than McCain supporters

Full survey here.