Gap Between Homeowner Estimates and Appraisal Values Continues to Widen

Homeowners and appraisers are growing further apart on their opinions of home value, according to Quicken Loans survey data for March. Appraisals came in 1.77% below homeowner estimates. This gap is up from 1.69% in February .
This is the case despite the fact that home values were up 0.63% in March, according to appraisal data. Values were up 3.30% on the year.
Home Price Perception Index (HPPI)

Although homeowners generally think their homes are worth 1.77% more than appraisers do, the trends vary widely across the country. In many of the hotter housing markets, particularly in the West, appraisals are actually surprising many homeowners by coming in higher than they expect.
Quicken Loans Vice President of Capital Markets Bill Banfield explained some of the causes of this difference of opinion.
“The national average shows appraisals lower than homeowner expectations, but some cities are bucking that trend,” said Banfield. “With prices sprinting forward in many of the booming housing markets in the West, it can be difficult for homeowners to keep up with appraisers who are on the ground examining real estate price changes every day. This study is one more reminder for consumers to keep an eye on their local market before selling or refinancing. The state of their local market could affect their home’s value – on either end of the spectrum.”

Briefly taking a look at regional data, homeowners in the West were closest to appraiser estimates. They overestimated home value by just 1.46%. Meanwhile, homeowners in the South and Northeast were off by 1.75% and 1.94%, respectively. Midwestern homeowners brought up the rear, with a difference of 1.96%.
Of the metropolitan areas surveyed, Denver has the most underrated property values, with appraisals coming in 2.69% above expectations. Philadelphians continue to trend the other way, overestimating home value by 3.20%. Riverside, Calif., gets this month’s bragging rights for being closest to the button: Homeowners there overestimated property values by just 0.04%.
Home Value Index (HVI)

Part of the reason homeowners continue to overvalue in their homes may be because they know that, in general, those values are rising. That trend continued in March, with appraised values going up 0.63%.
Banfield said the warmer weather is marking the start of home buying season, and more buyers are competing for fewer homes.
“Real estate signs are beginning to pop up, even before leaves appear on the neighborhood trees. As home selling season gets started across the country, enthusiastic buyers are battling for available homes,” he said. “The increased attention to home sales has led to more competition for a relatively small inventory of homes, continuing to fuel the rising prices.”
On the regional side of the data, the Northeast had the biggest monthly rise in property value, up 1.78% and 3.85% on the year. The Midwest was next, up 0.86% and 2.11% annually. The South followed, up 0.84% and 4.67% since this time last year. The West had the smallest monthly increase, up 0.71% and 3.61% annually.
With home values on the rise, it makes sense to start looking now before we hit the summer months. If you’re looking to take cash out, you can still refinance at low rates. If you’re ready, you can get a purchase preapproval or refinance online through Rocket Mortgage ® by Quicken Loans ® . If you’d rather get started over the phone, one of our Home Loan Experts would be happy to work with you at (888) 980-6716.
The Quicken Loans Home Price Perception and Home Value Indexes are released on the second Tuesday of each month on the Quicken Loans Press Room .
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