1. Home
  2. Blog
  3. Mortgage News
  4. Homeowners Overestimate Home Values on a National Level, Vary Regional Perceptions
wooden front door

Homeowners overestimated the value of their homes by 1.69% in July, according to the results of a study released today by Quicken Loans. This is an improvement over last month when the gap between homeowner and appraiser opinion was 1.93%.

Home values also increased 1.43% in July based on the results of appraisals. Values are up 6.24% for the year.

Home Price Perception Index (HPPI)

Homeowners overestimated the value of their home compared with appraiser opinion by 1.69% in July. This is a 0.24% narrowing of the gap between homeowners and appraisers and represents an improvement.

What’s really striking about the numbers is just how much perceptions vary across regions. In the West, homeowners were closest to the target, overestimating value by 1.50%. Meanwhile, the Northeast sees homeowners overestimating value by as much as 1.87%. Homeowners in the South and Midwest are in the middle, overestimating the value by 1.65% and 1.81%, respectively.

The differences in perception of home value are best illustrated at the local level. Western cities like Denver, San Jose and San Francisco are seeing their values increase faster than other areas of the country; and as a result, they’re consistently underestimating property value. However, what’s really interesting is the difference is 3.10% in Denver and 2.52% and 2.36% in San Jose and San Francisco.

Quicken Loans Chief Economist Bob Walters explained the regional and metropolitan differences.

“One of the most important things for consumers to take away from the HPPI is just how regionalized housing truly is,” said Walters. “While those on the West coast are being surprised by their high appraisals, homeowners in the Northeast and Midwest are more likely to be shocked by their low values. If homeowners keep an eye on local home sales, they can be better aware of their current home value and not be shocked when they go to sell or refinance.”

With that in mind, homeowners in Denver had the most underestimated value, off by 3.10%. Philadelphia homeowners are on the other end of the spectrum, overestimating value by 3.40%. Of the cities surveyed, Miami residents have the best handle on their local market, overestimating value by just 0.02%.

Home Value Index (HVI)

Home values were up 1.43% in July, building on June’s 0.84% gain. They’ve increased 6.24% on the year.

The Midwest saw the biggest monthly gain, up 2.45% and 6.84% on the year. This was followed by the South, which was up 1.57% monthly and 6.26% annually. The Northeast had a 1.13% monthly gain yet the slowest yearly price of appreciation at 3.85%. The West had just a 0.74% value increase on the month, but it’s at 6.55% on the year.

Walters attributes the value increases to a couple of factors.

“Home values across the country have been growing at rapid pace, driven by especially enthusiastic buyers this summer,” he said. “While the lack of inventory compared to the mass of interested buyers has been the narrative for some time, the effect on the market has intensified as competition for available homes heated up and quickened the pace of rising home values.”

Because values are increasing, it’s a great time to refinance while rates are low and you can take advantage of your increased equity. If you’re in the market for a purchase, you’re going to want to move now before prices increase further. You can get started with your refinance or purchase today through Rocket Mortgage.

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.

Leave a Reply

Your email address will not be published. Required fields are marked *