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Homeowner and appraiser perceptions of value became more distant in March. There was more than a 25% increase in the gap between actual appraised values and homeowner estimates.

Home values were also down 0.20% on the month of March, but they’ve risen 3.37% on the year.

Home Price Perception Index (HPPI)

HPPI, HVI graph

The difference between what homeowners think their home is worth and actual appraised values was 0.78%, with appraisals coming in lower than homeowners expected. This is quite the jump from March when the difference was just 0.50%.

Quicken Loans Executive Vice President for Capital Markets Bill Banfield said that there’s more than one reason behind this sudden increase in discord between estimates and values.

“This month’s fluctuation in the HPPI was driven more by a dip in home values than a change in the owners’ viewpoint. Homeowners are often reluctant to believe their house has lowered in value, even at a slight monthly fluctuation,” said Banfield. “Depending on the area, appraised values are either growing at a much more measured pace or have taken a step back from their meteoric rise. Homeowners are usually slower to realize change – in either direction – than the appraisers who study the market on a daily basis. This can lead to a slight widening of the perception gap when there is a turn in the market.”

Turning to regional data, the difference was greatest in the Midwest, where homeowners overvalued their homes by 0.90%. The other regions were bunched up with the Northeast, South and West overestimating value by 0.78%, 0.76% and 0.70%, respectively.

Boston homeowners continue to have the most undervalued homes when comparing estimates to homeowner value at 2.23%. Chicago is at the other end of the spectrum, overestimating value by 1.94%. Meanwhile, Los Angeles is the market that’s closest to harmony with appraisers. LA homeowners only overestimate by 0.03%.

Home Value Index (HVI)

HPPI, HVI graph

While home values fell 0.20% in March, they have gone up 3.37% annually. Equity is still rising for homeowners, even if it’s at a slower pace.

Banfield broke down what buyers in the market are thinking.

“Some of the rampant buyer demand that we’ve seen over the last few years has subsided because of the affordability issues many areas are having, driven by a lack of availability,” he said. “Would-be buyers have decided to sit on the sidelines to see if more home inventory becomes available at the price-points where they’re shopping. The entire housing industry is watching to see what will happen in the coming months – whether owners and builders will provide the home inventory the buyers have been waiting for, amid the recent drop in interest rates.”

Home values in the South were down 1.45% on the month of March, but they’ve risen 2.31% on the year. In the Northeast, home values were down 0.19%, but have gone up 3.65% annually. In the Midwest, home values rose 0.68% and are 4.11% higher on the year. The West saw the largest month-to-month value growth, up 0.79% and 2.79% since March 2018.

If you’re looking to get started, it’s still a great time to take advantage of rising equity and lower rates for a refinance. If you’re looking to get into a home of your own, get a jump on home buying season before values and the market really heat up. You can apply online or give us a call at (800) 785-4788.

The 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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