The gap between appraiser and homeowner opinions of home value increased in April as homeowners overestimated the value of their homes by 0.69%. Meanwhile, home values bounced back, increasing by 0.28% in April following a March decrease in prices.

Home Price Perception Index (HPPI)

HVI HPPI Graph

April’s HPPI showed that homeowners rated their home values higher than appraisers did for the third straight month, with the gap widening to 0.69% from 0.40% in March. Despite this, appraiser opinions of home value were still higher than those of homeowners in 63% of the metro areas surveyed. It’s also important to note that with a difference of less than 1%, the gap is minimal.

Quicken Loans Chief Economist Bob Walters said it’s important for those in the market to have an accurate expectation of home value.

“While it is not surprising to most appraisers that homeowners are overestimating their home’s value on a national average, we should always make note of the direction the trend is heading to help set expectations for homebuyers and those looking to refinance,” said Walters. “There is nothing more disappointing to a homeowner than learning that the value of their home is less than they expected. This index is an important tool for lenders and homeowners alike as they set reasonable expectations for obtaining a mortgage.”

Appraiser opinions came in below homeowner value opinions in the Northeast, South and Midwest, with gaps of 0.58%, 0.70% and 1.23% respectively. The only holdout where appraiser opinions came in higher was the West at a 0.08% difference.

In a few major metropolitan areas surveyed, appraiser opinions of home value were higher than those of residents. San Jose saw appraiser opinions that were 6.73% more valuable than homeowner opinions. The same was true for San Francisco at 5.47%, and Denver at 4.09%.

On the other side of the spectrum was Charlotte, where homeowners overvalued their homes by 1.94%. In Philadelphia, the gap was 2.02%. Kansas City, MO, residents overestimated the value by 2.96%.

Home Value Index (HVI)

HVI HPPI Graph

The national HVI, which measures home value based on appraisal data, was up 0.28% nationally, rebounding from a drop in March. Prices are up 5.54% across the country since this time last year.

Walters said that homeowners are still looking for larger increases, but they should be hopeful that these don’t outpace wage growth.

“Home values increased in April, however it was not enough to cancel out March’s decline,” Walters said. “Homeowners that are still underwater are looking for large increases, but those increases can in fact price homebuyers out of the market. Home affordability could become a worry if home value increases get too far ahead of the modest pace of wage increases, which are sitting at about 2 percent annually.”

There were gains in each of the four major regions, with the West having the biggest gain at 0.68% month to month. The Midwest was almost flat with a 0.01% gain. Meanwhile, there was a 0.11% gain in the South and a 0.46% gain in the Northeast. The West posted a 6.58% gain in value year over year. Meanwhile, the Northeast gained just 2.39%. The Midwest saw a 5.62% gain, and the South saw a 4.90% gain.

The Home Price Perception and Home Value Indexes are posted on the Quicken Loans Press Room on the second Tuesday of each month.

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