Appraiser Income

Homeowners continue to overestimate the value of their homes, according to the results of a survey released today by Quicken Loans. The good news is the gap between homeowner and appraiser opinion got smaller for the second straight month.

Looking at values, they increased more than 1% in October after being close to flat in September.

Home Price Perception Index (HPPI)

Homeowners still think their homes are worth more than appraiser estimates, but the gap is narrowing. It’s down to 1.98% from 2% in September. This is heading in the right direction.

Quicken Loans Chief Economist Bob Walters said the move toward price agreement is good news for those looking to get a mortgage.

“It’s too early to call it a trend, but it is encouraging to see the gap between the estimates homeowners provide and the appraised values starting to narrow,” said Walters. “The more homeowners are in line with appraisers, the easier it will be to refinance their mortgage and easier for those looking to buy a home. If the two are aligned, it eliminates one of the top stumbling blocks in the mortgage process.”

Taking a look at regional data, estimates are the most out of whack in the Northeast where homeowners think their homes are worth 2.17% more than appraisers do. This is followed by the Midwest with a difference of 2.16%, and the South, where the gap is 1.92%. The West is closest to par with homeowners overestimating their property value by 1.74%.

Finally, we have metropolitan data. Homeowners in San Diego are in total agreement with appraisers in terms of home prices. Meanwhile, homeowners in San Jose, CA, continue to drastically undervalue their homes, with appraiser estimates coming in 5.10% higher. Homes in Philadelphia are the most overvalued by their owners with a 3.63% difference.

Home Value Index (HVI)

Speaking of those home values, they were up 1.07% in October. In addition, values are at 4.01% since the same time last year.

Walters said value increases could mean more homes become available on the market.

“Home values continue to make steady, healthy growth,” said Walters. “Equity gains increase homeowner faith and enthusiasm in the housing market. There are still many Americans underwater, but with every bump in equity more homeowners who have been waiting to list their home are able to sell or more easily refinance – which takes pressure off of those homeowners and provides housing inventory for first time homebuyers.”

Much of the home value increase occurred in the Northeast where the value was up 1.94%. The Midwest was next, gaining 0.92% in value, followed by the South, which gained 0.55%. The West brought up the rear with an increase of 0.49%.

The Quicken Loans Home Price Perception and Home Value Indexes are released on the second Tuesday of each month on the Quicken Loans Press Room.