U.S. Home Price Expectations Edge Closer to Appraised Reality

Homeowners’ expectations of how much their properties are worth fell closer in line with the reality of their appraised values, according to the latest analysis from Quicken Loans.

Appraisals lagged behind homeowners’ estimations by just 1.26% in September, as indicated by Quicken Loans’ national Home Price Perception Index (HPPI).

Compared to the previous month, September’s index signals a slight nudge toward equilibrium after a 1.56% gap between perceptions in August. This represents the third time in as many months that the HPPI has moved closer to agreement between homeowners and appraisers.


It is important to note that while the Quicken Loans HPPI shows this relationship between homeowner expectations and appraised home values, the index does not reflect the reality in all areas of the country.

For example, the housing markets of Denver, San Francisco and San Jose—considered fast growing areas—had appraised values that were higher than what homeowners estimated; whereas in Philadelphia, Baltimore and Chicago, appraisals were lower than what homeowners believed they would be.screen-shot-2016-10-12-at-10-33-19-am

(Source: Quicken Loans Home Price Perception Index)

“When reading about the health of the economy many consumers don’t take into account how varied housing markets can be,” said Quicken Loans Chief Economist Bob Walters in a press release. “If a homeowner in Philadelphia hears about the housing boom out west, they could be surprised when their home doesn’t sell at the price they thought it would.”

Nationally, the average appraisal was 0.28% lower in September than August, but 7.78% higher year-over-year, according to Quicken’s analysis.

At the regional level, the West and South reported small appraisal gains with a 0.31% for each. Meanwhile, in the Midwest and Northeast, appraised values fell 2.23% and 1.42%, respectively.

Despite the monthly variations, all regions reported increasing annual growth in home values ranging from 5.52% in the Northeast to an 8% gain in the West.

The small decrease in home values seen in September is not a signal of a turning tide, but instead shows the volatility that can come with changing seasons, Walters said.

“As the summer came to a close, the intense competition for available homes began to abate and home values dipped as a result,” he said. “It’s important to focus on the annual picture. The strong yearly growth negates monthly changes and shows we are moving in the right direction.”

Written by Jason Oliva

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