Homeowners have inflated opinions of what their homes are actually worth, only to receive a reality check from their property’s appraised value, according to a recent analysis.
On average, appraised home values in December were 1.8% lower than homeowners’ expectations of their home’s value, notes the latest national Home Price Perception Index from Quicken Loans.
Meanwhile, home values continued to climb during the month, with appraised values rising a modest 0.18% from November and 5.81% since December 2014. Since the beginning of the 2015, values have risen 3.8%.
Although December marks the 11th consecutive month when appraised values were lower than homeowners’ expectations, it is the fourth month in which the gap between appraisals and expectations have narrowed. This narrowing of the perceived vs. appraisal value gap was an excellent way to end 2015, said Quicken Loans Chief Economist Bob Walters.
“The more homeowners are in line with appraisers, and understand the equity in their home, the easier it will be to refinance their mortgage,” Walters said in a prepared statement. “In the same vein, if homebuyers understand how the local market is performing, they will be better equipped to come in with a strong offer on the home of their dreams.”
Many of the metro areas tracked by Quicken Loans’ Home Price Perception Index (HPPI) showed perception moving closer to equal, with appraisals remaining higher in Western cities, while homeowner expectations topped appraised values in many Northeastern and Midwestern cities.
Regionally, the Northeast saw the biggest difference between appraised value and homeowner expectations, with home values 2.10% lower than perceived worth. In the Midwest, appraisals were 1.99% lower than homeowner’s perception of value, while in the South home values were 1.76% lower and 1.42% lower in the West.
As for cities, the appraised value of homes, on average, were 4.99% higher than homeowner’s expectations in San Jose, Calif., the most of any major metro tracked by the Quicken Loans’ index.
Denver ranked second, with appraised values 4.26% higher than homeowner’s perceived value; and San Francisco ranking third with values 3.94% higher than homeowners’ expectations.
At the opposite end of the spectrum, Philadelphia had the largest gap among major U.S. cities, with appraised home values 3.5%, on average, lower than expectations. The city was followed closely by Baltimore (-3.04%), Chicago (-2.85%), Detroit (-2.43) and New York (-2.07%).
“2015 bookends with the same story we’ve heard throughout the year—a housing supply that trails the demand, continuing to push values higher,” Walters said. “The market could benefit from homeowners taking advantage of the equity they are building, and make their home available to the many eager buyers. This could give buyers a chance to find the home they have been waiting for.”
Written by Jason OlivaPrint Article