close-up of a wondow on a house

Homeowners in many areas of the West continue to underestimate their home values. This is different from homeowners in the rest of the country, who continue to overestimate values.

On a national level, the gap between homeowner and appraiser opinions of home value did narrow to 1.89% in May from 1.95%. Home values were up 0.79% nationwide in May and increased 4.36% year to year.

Home Price Perception Index (HPPI)

The West Underestimates Its Home Value - Quicken Loans Zing Blog

Appraisal values were 1.89% lower than homeowner expectations in May, but that doesn’t tell the whole story. The market is much different in the West than it is anywhere else in the U.S. For example, home values in Denver were 3.28% higher than homeowner expectations. In contrast, in the other parts of the country, such as in Philadelphia, Detroit and Baltimore, appraisals averaged more than 3% lower than homeowner estimates.

Quicken Loans Chief Economist Bob Walters said that there are very different market trends at play across the country at the moment.

“The hot housing markets along the West Coast are growing quicker than owners realize, giving way to higher than expected prices for buyers and more home equity for existing owners,” said Walters. “On the other hand, the housing markets are more balanced in the East and Midwest, leading owners to be slightly overenthusiastic about their home’s appreciation.”

On a regional basis, homeowner opinions of home values in the West are closest to those of appraisers – homeowners are overestimating value by just 1.56%. This shouldn’t be a surprise, as nine of the region’s major markets are still underestimating home value. The West is followed by the South and Northeast, which overestimate the value by 1.87% and 2.06%, respectively. The Midwest brings up the rear, with a 2.12% gap.

Denver homeowners had the most underestimated home values, off by 3.28%. Philadelphians continue to have the most inflated opinion of home value, overestimating by 3.48%. The Seattle market, however, is closest to equilibrium, with homeowners there underestimating their value by just 0.03%.

Home Value Index (HVI)

The West Underestimates Its Home Value - Quicken Loans Zing Blog

Appraised values grew at a soft pace of 0.79% in April, but they’re up 4.36% on the year.

Walters said a lack of available houses is driving prices up at this point.

“Demand for housing coupled with a lack of choice for buyers pushed home values up yet again,” he said. “This is a narrative we have heard for quite some time. Many owners aren’t moving on from their current homes, which is holding back available inventory for both first time and move up buyers. With values on the rise, this could prove to be an ideal time to sell – especially in the hot markets, where owners could get more than they expected.”

If we break this down by region, the West is up 1.20% on the month and 6.21% for the year. It’s followed by the South, up 0.47% in May and 3.83% for the year. The Northeast was up 0.69% in May and up 2.03% annually. Finally, the Midwest inched up 0.01% in May, but it’s 3.54% higher across the region on the year.

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 site.

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