Owner Perceptions of Home Values Rise as the Year Ends

It’s a given that homeowners, on average, have a higher opinion of their own home values than, say, appraisers, realtors and potential home buyers. But Quicken Loans, Detroit, says the gap between perception and reality is narrowing.

The company’s monthly National Home Price Perception Index reported the gap between average owners’ estimates and average appraised values has reached its narrowest margin in 2017 in November. The report said home appraisals were an average of 0.67 percent lower than what owners expected, the smallest since March 2015. November also marks the sixth-straight month the gap between the two values has narrowed.

Quicken noted though owner expectations have lagged appraiser opinions, home values continue to climb across the country. It said home values rose 4.24 percent year-over-year, despite a slight 0.09 percent dip from October to November.

The value varies widely across the country, Quicken said. Cleveland is on the low end of the scale, with appraisals on average 2.35 percent lower than expected. On the flip side, homeowners in Dallas are underestimating their homes’ value, with the average appraisal 3.25 percent higher than what the owner estimated.

“It’s encouraging to see opinions from homeowners and appraisers more aligned on a national level,” said Bill Banfield, Quicken Loans Executive Vice President of Capital Markets. “Appraisals are one of the most important data points when applying for a mortgage. If an appraisal is lower than expected when refinancing, the homeowner will need to bring more funds to closing, or might even need the mortgage to be restructured. The more homeowners and appraisers agree, the smoother the process is.”

Quicken said while all regions had year-over-year growth, the southern and northeast experienced slight drops in average home value from October to November.

“As we move into the holiday season, Americans are focusing less on finding their dream home and more on finding the perfect gifts to give to their loved ones,” said Banfield. “As housing demand temporarily cools this time of year, we also see a dip in home values. However, it’s a promising sign to see values continue rising annually.”