The gap between homeowners ‘and appraisers’ perceptions of value widened dramatically in March
Perceptions of value by owners and appraisers faded in March. There was an increase of more than 25% in the difference between the actual estimated values and the owners’ estimates.
Home values were also down 0.20% from March, but were up 3.37% on the year.
Home Price Perception Index (HPPI)
The difference between what homeowners think their home is worth and actual appraised values was 0.78%, with valuations falling below homeowners’ expectations. That’s quite a jump from March, when the difference was only 0.50%.
Quicken Loans executive vice president for capital markets Bill Banfield said there is more than one reason behind this sudden increase in the discord between estimates and values.
“The fluctuation in the IPHP this month is more a result of a drop in home values than a change in the owner’s perspective. Homeowners are often reluctant to believe their home has lost value, even with a slight monthly fluctuation, ”Banfield said. “Depending on the region, the estimated values are increasing at a much more measured rate or have taken a step back from their meteoric rise. Owners are generally slower to effect change – back and forth – than valuers who study the market on a daily basis. This may lead to a slight widening of the perception gap in the event of a market reversal. “
When it comes to regional data, the difference was greatest in the Midwest, where homeowners overvalued their homes by 0.90%. The other regions were grouped together with the overestimation value of Northeast, South and West of 0.78%, 0.76% and 0.70%, respectively.
Boston homeowners continue to have the most undervalued homes when comparing homeowners’ estimates at 2.23%. Chicago is on the other end of the spectrum, overestimating the value by 1.94%. Meanwhile, Los Angeles is the market closest to harmony with appraisers. LA owners only overestimate by 0.03%.
Home Value Index (HVI)
While home values fell 0.20% in March, they rose 3.37% annually. Equity continues to increase for homeowners, although at a slower pace.
Banfield explained what buyers think of the market.
“Some of the surge in buyer demand that we have seen in recent years has eased due to affordability issues in many regions due to lack of availability,” he said. “Potential buyers have decided to sit on the sidelines to see if more home inventory becomes available at the price points they are shopping at. The entire housing industry is watching to see what will happen in the months to come – whether homeowners and builders will provide the home inventory that buyers have been waiting for, amid the recent drop in interest rates. .
Home values in the South fell 1.45% in March, but rose 2.31% on the year. In the Northeast, home values fell 0.19%, but rose 3.65% annually. In the Midwest, home values rose 0.68% and 4.11% more on the year. The West experienced the strongest month-over-month growth in value, up 0.79% and 2.79% since March 2018.
If you’re looking to get started, now is always a great time to take advantage of rising equity and lower rates for refinancing. If you’re looking to settle into your own home, jump into home buying season before values and the market really heat up. You can apply online or call us at (800) 785-4788.
Home Price Perception Indexes and Home Value Indexes are published on the second Tuesday of each month on Quicken Loans Newsroom.
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