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US homeowners in self denial and believe property is worth more than last year

The national survey has found that homeowners aren't going to let the worst national housing downturn in a generation interfere with their property value expectations.

Some 40% said they think their house is worth more than it was a year ago. And 22% more believe their home price is unchanged, according to the poll by online real estate site Zillow.

The biggest increase in owner expectations was in the South, where almost half of homeowners surveyed said their house has gained in value in the last year.

In reality figures show that more than 75% of US homeowners have seen their values decline since last year whether they are willing to admit it or not.

'The survey reveals a wide gap between the perception homeowners have about their own home's value and the realities of a market in which three-quarters of homes declined in value in the past year,' said Stan Humphries, Zillow vice president.

'We attribute this gap to a combination of inattention and a fair bit of denial that causes people to believe their home is insulated from the woes of the market that affect others, but not them,' he added.

The latest state figures show that the values of homes, businesses and other properties across Florida, one of the worst hit states, declined $153 billion during the last year, and the murky economic picture isn't expected to improve until sometime in 2009.

Total property values dropped an unprecedented 6%, double the figure economists had projected last year.

Unsurprisingly foreclosures are up across the US, but certain states, including Florida, have been particularly hard hit. Metropolitan areas in California and Florida made up 16 of the top 20 metro foreclosure rates in the second quarter, according to RealtyTrac Inc., a company that monitors default notices, auction sale notices and bank repossessions.

Another badly hit area is military towns where it is believed that military personnel may have been targeted by subprime mortgages providers because of credit problems that can sometimes result from the frequent moves required of them.

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