Perceptions Above Appraised Value, but Gap Narrows - Quicken Loans Zing Blog

Homeowner perceptions of property value were 1.8% higher than the opinions of appraisers, according to the nation’s second largest retail mortgage lender Quicken Loans.

This marks the 11th straight month that homeowners have overvalued their homes, but the fourth consecutive month in which the parties came closer to agreement.

Turning to home values, they rose 0.18% nationwide in December.

Home Price Perception Index (HPPI)

P-HVI-HPPI-Graphs-20160106

Appraiser opinions were an average of 1.8% lower than what homeowners expected, marking the 11th straight month where this has been the case. Despite the differences, over the past four months, the valuations and homeowner perceptions have gotten closer together.

Quicken Loans Chief Economist Bob Walters said the narrowing of the opinion gap is a good thing whether you’re in the market to purchase or refinance.

“The narrowing of the perceived vs. appraisal value gap is an excellent way to end the year,” said Walters. “The more homeowners are in line with appraisers, and understand the equity in their home, the easier it will be to refinance their mortgage. In the same vein, if home buyers understand how the local market is performing, they will be better equipped to come in with a strong offer on the home of their dreams.”

Looking at the regional data, the Northeast has the biggest opinion gap, with homeowners overvaluing their homes by 2.10%. It’s followed by the Midwest and South at 1.99% and 1.76% higher than appraiser opinion, respectively. The West has a difference of opinion with appraisers that’s just 1.42% on the high side.

In the metro areas, homeowners in San Jose, CA continue to have the most undervalued properties, with their opinions coming in 4.99% below appraisers. Meanwhile, Philadelphia homeowners are a bit out of touch with market conditions, with their estimates being 3.50% higher than appraisal opinion. Homeowners in Miami are closest to the sweet spot, with their estimates coming in 0.10% below appraiser opinion.

Home Value Index (HVI)

P-HVI-HPPI-Graphs-20160106

Home values were up 0.18% in December, and they’re up 5.81% since the same time last year.

Walters said the increases in home values are a function of market conditions.

“2015 bookends with the same story we have heard throughout the year – a housing supply that trails the demand, continuing to push values higher,” he said. “The market could benefit from homeowners taking advantage of the equity they are building, and make their home available to the many eager buyers. This could give buyers a chance to find the home they have been waiting for.”

Regionally, numbers were a little more mixed. There were value declines of 0.38% and 0.95% for the month in the Northeast and South. Offsetting these were gains of 0.37% in the West and 1.07% in the Midwest.

The West has seen gains in value of 8.61% since this time last year. It’s followed by the South with a 4.00% gain and the Midwest at 3.83%. The Northeast brings up the rear, showing a 1.87% increase over a year ago.

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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