Seventy seven percent of U.S. homeowners believe that the value of their home increased or remained the same during 2007, according to a study released Wednesday by real estate information site Zillow.com. That’s despite overwhelming evidence showing the nation’s first median price decline since the Depression era. What’s more, a majority of homeowners — 67 percent — said they will spend the same or more on major home improvements this year, with 35 percent saying they are planning on obtaining a home equity loan and another 36 percent saying they will look to refinance or take out a second mortgage. “This survey reveals that despite the data to the contrary, people either aren’t paying attention to their housing market or are in denial about their own home’s value,” said Dr. Stan Humphries, Zillow.com vice president of data & analytics. “This likely reflects the fact that most Americans have not realized home-related losses because they’re staying in their homes. Even in declining markets where a greater percentage of new homeowners are underwater on their mortgage, it’s important to remember most people are not really affected by declining values unless they absolutely must sell or need to immediately refinance or withdraw equity.” I would have loved to have seen borrowers asked about other people’s homes in addition to their own; I suspect an interesting divergence would have appeared, showing that homeowners understand that prices are falling, but that they perceive the decline isn’t as bad in their particular street or neighborhood.

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