Homeowners Continue To Overestimate Value Except In Hot Markets

Dated: 08/10/2017

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Homeowners continue to overestimate the value of their homes, except in hot markets, according to the latest Quicken Loans’ HPPI.

Appraised home values came in 1.55 percent below what homeowners expected in July, according to the latest Quicken Loans’ National Home Price Perception Index (HPPI). The latest Quicken Loans National Home Value Index (HVI) shows appraised values rose 4.21 percent year-over-year.

“The home appraisal is one of the most important data points in the mortgage process,” says Bill Banfield, executive vice president of Capital Markets at Quicken Loans. “It determines the level of equity the homeowner has and, if the owner’s estimate is too far from how the appraiser views the property, it can cause the mortgage to be restructured. Our hope is that this Index is eye-opening for homeowners. Their home equity could be thousands of dollars higher, or lower, than they realize. If they are aware of the perceived trends in their area it could help them better prepare for their home purchase or refinance.”

A summary of the HPPI:
The HPPI shows appraisers’ opinions fell short of homeowners’ expectations by 1.55 percent in July. This shows a narrowing gap, as homeowner estimates in June were 1.70 percent lower than appraised values. HPPI tracks differing trends across the country, as real estate often fluctuates on a local basis. On average, appraisals were higher than owner expectations—the inverse of the national trend—in some of the fastest-growing housing markets, including Dallas and Denver. However, some metro areas in the Northeast and the Midwest regions reported appraised values lower than owner estimates at a higher rate than the national trend.

A summary of the HVI:
The National HVI, based solely on appraisal data, reported home values rose an average of 0.33 percent in July. The positive momentum was even more substantial for the annual measure, showing a 4.21 percent increase year-over-year. All of the areas measured also reported annual home value growth—ranging from a 2.65 percent annual increase in the Northeast to a 5.64 percent annual rise in value in the West.

“The regional differences in home value growth mirror the perception difference across the country,” Banfield says. “Areas with slower growth were more likely to have owners overestimating their home value, and areas with much stronger growth had higher appraisals than owners realized they would be. With home values constantly changing, and the rates of change varying across the country, this is one more way to show how important it is for homeowners to stay aware of their local housing market.”

For more information, please visit QuickenLoans.com/Indexes.

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