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Appraisals and ValuationsReal Estate

Are you overestimating your home value?

That might depend on where you live

Could you be overestimating the value of your home? As it turns out, many homeowners are.

Homeowner estimates of their property’s value remains above the appraised value, and even grew farther away from appraiser opinions in February.

Homeowners priced their homes an average of 1.69% higher than the appraised value in February, according to the National Home Price Perception Index from Quicken Loans. This is wider than last month’s spread of 1.47%, and the third consecutive month of increasing disagreement.

In fact, the trend of appraised values falling below homeowner expectations began in February 2015.

Home appraised values increased 0.55% month-over-month in February and 2.95% annually, according to the National Home Value Index.

“Quicken Loans is in a unique position, with access to two valuable data points,” said Bill Banfield, Quicken Loans vice president of capital markets. “Homeowners tell us what they think their home is worth at the beginning of the mortgage process, then we compare that with the appraiser’s opinion of value.”

“We hope consumers will take advantage of this information, seeing how their neighbors are perceiving their housing market, so they can better understand their own home’s value” Banfield said.

However, this graph shows that, except for a brief period in 2014, homeowner estimates are usually far below the appraised value. In fact, since falling below appraised values once again in 2015, homeowners and appraisers values remained closer than at any other point on the graph.

Click to Enlarge


(Source: Quicken Loans)

But homeowners in some metros stray further than others. As the chart below shows, in Cleveland, for example, homeowners are much farther below appraised values than in Las Vegas.

The chart also shows that in some metros, homeowners are actually undervaluing their home. In Miami the difference is miniscule, however in Denver homebuyers estimates are nearly 3% lower than they should be.

Click to Enlarge


(Source: Quicken Loans)

So how should homeowners adjust their estimates for the Spring home buying season? Banfield explains:

“Low levels of home inventory persists as the main driver of home value growth,” he said. “There are still plenty of interested buyers vying for a slim amount of homes for sale – pushing prices higher. Home values are likely to move higher in the Midwest as the spring buying season approaches, unless the number of homes available increases.”

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