Home Values On The Rise In August, But Still Falling Short Of Homeowner Expectations

The most recent Quicken Loans study of homeowner value perceptions revealed that the disparity between appraiser and homeowner opinions of home values continued to narrow in August.

While home values have generally increased since 2011, homeowners’ perceptions of home values have become inflated relative to appraiser valuations. The difference between homeowner perceived value and appraiser value peaked at nearly 3 percent in early 2015, but the gap has now narrowed to 1.56 percent.

Homeowners’ Price Perception

In the study, the difference between homeowner estimates of home worth and appraiser valuations was measured using Quicken Loans’ Home Price Perception Index (HPPI). The HPPI was determined by comparing the difference between the homeowner’s estimated home value as listed on the mortgage application to the appraised value of the home.

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Historically, homeowners tend to over-estimate the values of their homes. However, the HPPI indicates that appraisals, on average, consistently exceeded homeowners’ estimates throughout the second half of 2013 and most of 2014. Since late 2014, homeowners’ estimates of home values have again consistently exceeded appraiser estimates. In August, homeowners over-estimated the value of their homes by only about 1.5 percent.

Appraisers’ Valuation

The Quicken Loans study also compared the trends for HPPI to those for Home Value Index (HVI), which reflects only the appraised value of the home.

The national HVI has been mostly on the rise in recent years, gaining 1.7 percent in the month of August. Both HVI and HPPI were calculated using Quicken Loans’ mortgage data from over 3,000 counties across the United States, including four geographic and 27 metropolitan areas.

Valuation By Location

While average home values in the United States have risen 8.1 percent since August 2015, home values in the Northeast have lagged, gaining just 3.8 percent.

With regards to HPPI, overall appraiser valuations in many of the metropolitan areas surveyed exceeded homeowner perceptions in August. The cities in which homeowners most underestimated the value of their homes include San Jose, San Francisco and Denver.

Despite a booming U.S. housing market, the SPDR S&P Homebuilders (ETF) XHB has underperformed the broader market this year, falling 0.3 percent year-to-date.