Photo: Robert Clark
Although the gap between homeowner and appraiser estimates narrowed in August, American homeowners are still overestimating the value of their homes.
Homeowners in the Northeast and Midwest are, on average, overestimating their home’s value more than the other regions of the country, according to a report released yesterday by the mortgage company Quicken Loans.
Nationally, appraiser values were, on average, 1.35 percent lower than homeowner estimates last month, down from 1.55 percent the previous month, according to the Home Price Perception Index (HPPI) by Quicken Loans.
The HPPI measures the difference between homeowners’ perceived estimates and appraiser’s opinions of home values. A home’s value, or perceived value, can impact a homeowner’s decision to sell, refinance or access equity, says Quicken Loans.
Regionally, value discrepancies varied greatly in the West where home values were 3 percent higher than homeowners perceived. Meantime, they were 3 percent lower in the Northeast.
A 3 percent difference may not sound like a lot, but in a hot market it could translate into upwards of $11,000 in additional equity for the homeowner, says Quicken Loans.
The August HPPI highlights “how regionalized real estate is.”
“Homeowners who have a better understanding of their local housing market can make more informed decisions about their home. After all, their house is not just where they live, but one of their bigger assets,” Bill Banfield, Quicken Loans Executive Vice President of Capital Markets, says in the report.
Even though perceptions of what a house is worth can vary, home values themselves are in constant flux. Over the last month, home values increased 0.19 percent in August, the slowest pace of 2017 so far. However, home values were up 2.64 percent from the same time last year, according to the Home Value Index (HMI) by Quicken Loans.
Regionally, home values fell over the last month in the South and the East, dropping 0.52 percent and 0.58, respectively. Meantime, values grew in the Midwest and West by 0.16 percent and 1.34 percent, respectively, over the same period.
Homes values were up over 5 percent year-over-year in the West, the largest annual gains recorded regionally in August. Home values were up 3.77 percent in the South, 2.62 percent in the Midwest, and 0.34 percent from last year in August.
“It’s important to focus on the annual numbers with the HVI. While there can be some monthly variations in the data, especially as seasons start to change, the annual numbers show healthy growth across the country,” Banfield says in the report.
Click here to read the entire report.