Gap Between Homeowner and Appraiser Perception of Value Continues to Widen

Homeowner perception of property value is increasingly diverting from that of appraisers as the gap between the two has widened for the fourth straight month. The good news is appraised values did increase 0.05% nationally last month.

Home Price Perception Index (HPPI)

Appraisal values came in 0.5% lower than homeowner opinion in February. Despite an increasing gap between the parties, there’s still some reason for optimism here. In the metro areas surveyed, no appraisal came in more than 2% lower than homeowner expectations. Additionally, homeowners are still seeing appraisals that are higher than they expect in 62% of the cities surveyed.

Quicken Loans Executive Vice President of Capital Markets Bill Banfield said that this was an exciting report for homeowners.

“Even though the home value perceptions are declining at a national level, the majority of metro areas are getting appraisals at, or above, what the homeowner expected,” he said. “This is particularly exciting news at a time when we are seeing heighted interest in cash out refinances. More and more, owners are choosing to invest in their home by making improvements instead of moving. If appraisals are higher than expected, an owner could find it more comfortable to do those home improvements they always had in the back of their mind.”

At the regional level, the West remains closest to the actual appraised value, with homeowner’s overestimating by just 0.22%. In the South and Northeast, homeowners were overvaluing properties by 0.4% and 0.48%, respectively. The Midwest significantly trails, overestimating values by 0.79%.

Taking a look at data at the metro level, homeowners in Boston continue to have the hottest housing market in the survey with values coming in 2.51% higher than homeowner estimates. Chicago is at the other end of things, with appraisals coming in 0.79% below expectations. Riverside, California is the closest to the button, with appraisals coming in just 0.02% below their expectation.

Home Value Index (HVI)

Home values were up 0.05% last month and have risen 5.47% on the year. This is a quicker pace of appreciation than January. However, regionally, things were a bit all over the place.

Banfield said the market is trying to find its level heading into the spring busy season.

“Home values are still making modest annual gains, despite being practically stagnant when measured monthly. What everyone has their eye on is what will happen as the spring selling season kicks off,” said Banfield. “Home prices, and in turn home values, are mostly driven by the balance of how many homes are on the market and the volume of buyers vying for them. Most of the industry is expecting the demand will remain high, like in years past, but what remains to be seen is how many owners will choose to list their home – creating availability for both first time and move up buyers.”

Going across the country, values in the Northeast were up 0.5% on the month and have risen 4.8% on the year. In the West, values rose 0.33% and 5.6% annually. In the Midwest, values fell 0.25% and have only risen 3.72% since the same time a year ago. Finally, in the South, values fell 0.56%, but are up 5.28% on the year.

If you’re looking to purchase, it’s a great time to do so before things get really busy in the spring. If you’re looking to refinance, increasing home values mean you could be gaining equity faster than you think. If you’re interested, you can get started online or give us a call at (888) 980-6716.

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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