Quicken Loans Data Reveals We're Still Overly Optimistic On Home Values

• The latest data from Quicken shows that homeowners were slightly more realistic about home value estimates in September.
• Homeowners’ estimates of home values came in 2.0 percent above appraiser estimates in September, a slight month-over-month decline.
• U.S. housing prices in the West continue to outperform those in the rest of the country.

The most recent study by Quicken Loans Inc. of homeowner value perceptions revealed that the disparity between appraiser and homeowner opinions of home values contracted in September for the first time on over a year.
 

While home values have generally increased from month to month over the past year, homeowners’ perceptions of home value have become consistently inflated relative to appraiser valuations.

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 with the appraised value of the home.

Although the HPPI indicates that appraisals, on average, consistently exceeded homeowners’ estimates throughout 2014, homeowners’ estimates of home values mostly been on the rise this year and came in 2.0 percent above appraiser estimates in September.

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 trended mostly sideways in the last three months, including an increase of 0.05 percent in the month of September. Both HVI and HPPI were calculated using Quicken Loans’ mortgage data from over 3000 counties across the U.S, including four geographic and 27 metropolitan areas.

Valuation By Location
While average home values in the U.S. have risen 3.11 percent since September 2014, home values in the West have outpaced the national average, climbing 6.03 percent during that time.

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

The SPDR S&P Homebuilders (ETF) XHB has outperformed the broader market this year, returning 7.4 percent year-to-date.

Disclosure: the author holds no position in the stocks mentioned.