Homeowner estimates were out of step with those of appraisers as the gap between the two widened by nearly a quarter point in February. Homeowners now rate their home values 1.99% higher than appraisers do.

The news wasn’t all bad. Home values increased 1.51% on the month. They are up 3.89% since February of last year.

Home Price Perception Index (HPPI)
Gap Between Homeowner Expectation and Appraised Value Widens - Quicken Loans Zing Blog

For the first time in six months, the gap between homeowner and appraiser opinion widened. Homeowners rated their homes 0.24% higher in value than they did last month, bringing the total difference to 1.99%.

Despite the reversal in the numbers, Quicken Loans Chief Economist Bob Walters said this isn’t really out of line.

“While it is always disappointing for homeowners to learn they don’t have quite the home equity they expected, the national HPPI is still within a normal range,” said Walters. “In an ever-changing real estate market, home values fluctuate and these changes are most quickly realized by appraisers who are evaluating local sales every single day.”

Turning to regional data, opinion in the West was closest to that of appraisers, with just a 1.74% difference. In the South, appraised values were 1.91% below homeowner expectations. It was 2.16% and 2.23% in the Northeast and Midwest, respectively.

In the metro areas, San Jose, Calif., homeowners are underestimating their property values by 4.35%. Meanwhile, Philadelphia homeowners have estimates that are 3.71% higher than those of appraisers. Miami homeowners are soaking up the sun and properly estimating their home value. Their opinions are just 0.13% below those of appraisers.

It’s at this local level that these numbers are really important. By knowing the market values in your area, it makes it easier to know how much equity you have when you’re getting ready to refinance. When you’re purchasing, knowing what market prices are can give you a leg up in negotiations.

Home Value Index (HVI)

Gap Between Homeowner Expectation and Appraised Value Widens - Quicken Loans Zing Blog

Home values were 1.51% higher in February, making up for a slight January downturn. They’ve increased 3.89% since the same time last year. There’s a good chance you’ve seen gains in equity in your area.

The biggest value increase was in the Midwest at 3.37% on the month. The West was a distant second at 2.24%, followed by the Northeast at 2.04%. The South saw a slight decrease of 0.06% for the month.

Walters explained that certain market conditions were driving home values higher.

“A lack of inventory continues to affect home values as eager buyers compete for a small selection of homes,” Walters said. “This can be seen as home values jump in the Midwest right as the harsh winter hits, keeping some from listing their home. Home prices continue their long march back from the big price drops experienced in the financial crash. As more and more Americans gain equity, this increases the number of homeowners who are financially able to sell their home and buy another one. We’re seeing the benefits of this virtuous cycle in rising home prices, which is also being greatly aided by historically low mortgage rates.”

The Quicken Loans Home Price Perception and Home Value indexes are released on the second Tuesday of each month in the Quicken Loans Press Room.

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