I think this list of cognitive biases goes pretty far in explaining why we see such apparent madness in these polls:

http://en.wikipedia.org/wiki/List_of_cognitive_biases

As humans we are deeply flawed where economic/financial decision making is involved.

I’m actually not shocked by this poll at all. Most of the people I’ve observed have heard about the downturn, but don’t think it affects them. Why should it? They still have pretty easy access to HELOC’s and such. They haven’t seen any effects from the rise in interest rates (yet). Until they are affected… they are un-affected.

It was this comment in the poll that I see causing some real pain over the next 5 years for those who are still rosy:

Indeed, 69 percent reported that they’re confident enough that they are likely to renovate or make some improvement in their home during the next 12 months, and 27 percent said they are likely to be moving on up, if not to the East Side, at least to a better house sometime in the next five years.

They won’t really understand what it means to have the bottom cut out of a market until they are the ones trying to sell and “move on up”. I just LOVE to read how the “experts” still think this “problem” is only in sub-prime. It’s like these people truly don’t understand how this whole system operates. I guess it’s also why people keep falling for ponzi schemes.

After a year or two of that, you’ll start seeing more people in the “upper” levels (an identifiable number) having trouble selling as those people in the “mid” level can’t sell and move up like they had planned.

I have never thought that this would be one big uniform “crash”. Because it will never really happen that way, people will continue to “not” think this is happening at all… just like the people in this poll.

national

Perhaps we should consider that this poll probably considered the entire United States, as opposed to a small little area in San Diego.

There were a lot of areas in the U.S. that did not rise as high as San Diego and the bubble areas and so they could hardly be blamed for believing in real estate.

Now if that poll was restricted to the bubble areas, then it would be alarming.

Surveyor-

"national"

True dat. I watch the zips near me (upstate NY) as closely as I do those in San Diego. In the nearest city and surrounding zips, there is only one with any bubble-looking inventory. Lo and behold, it is the same town where two guys were convicted of mortgage fraud last month.

I think some areas didnt jump into the gambling-on-real-estate activity.  These non-carbonated areas may still fall somewhat, but there is no great fear for the residents.  I can see them answering the polls as the majority did.  really, prices are so low here, how much further could they fall? 

But a non-speculative-market state (Ohio) currently has the highest foreclosure rate ever recorded in U.S history.

(Sorry I don’t have a link..Saw it on http://www.patrick.net the other day).

People all over the country should know by now the market is on a downward trend…but I think they’re still too busy “consuming” to be paying attention…..

ohio

It is true that Ohio and the rustbelt in general has a lot of foreclosures. However, Ohio has had a lot of foreclosures for a long time and it is nothing new. The foreclosures are due to losses in the auto industry and are not attributed to the high price of housing.

However, Texas, South Carolina, North Carolina, Tennessee Atlanta are seeing booms right now. Other states are seeing low to medium growth, not price declines (except of course for the bubble areas and rustbelt area).

Real estate is very very local. Not everything goes up at the same time and not everything goes down at the same time. Savvy real estate investors can use that fact in order to diversify their holdings and create more money.

Surveyor, I disagree completely. Foreclosures everywhere are due to high prices of housing…Period. I understand that all real estate is local…..but I don’t believe there are many good markets right now. (I’m a former Realtor in San Diego and I was involved in nearly 100 transactions in my relatively brief career before leaving the industry for greener pastures). Just because prices in certain areas are lower than others that does not make them a good deal. Texas, South Carolina, North Carolina, Tennessee and Atlanta are NOT booming. (Booming in unsold properties maybe…In fact, last I heard Atlanta had over 100,000 homes on the market). Those areas were booming a few years ago when California money was buying many of their properties….Now many of those “saavy” investors are holding a declining asset with negative cashflow each month.