This month, something unexpected happened in Quicken Loans' national Home Price Perception Index (HPPI). According to the report, western homeowners went against the nationwide trend of homeowners overvaluing their homes. Instead, their estimates came in much lower than appraised values.
Quicken Loans found that home appraisals in May were an average of 1.89 percent lower than what homeowner expectations, a slight shift toward the point of equilibrium compared to 1.95 percent in April.
Regionally, the East and Midwest experienced the same trend of homeowner estimates outpacing appraised value, but the West went against the , with many of the region’s metro areas appraising higher than owners’ estimates.
According to Quicken, Denver, Colorado had the highest HPPI value in May, with appraised values 3.28 percent higher than what homeowners estimated. San Francisco, California was not too far behind, nearly hitting the 3 percent mark. In most of the Eastern and Midwestern cities the report observed, what homeowners believed their home was worth was much more than what appraisers thought. In Philadelphia, Detroit, and Baltimore, appraisals were more than 3 percent lower than what homeowners expected.
“The hot housing markets along the west coast are growing quicker than owners realize, giving way to higher than expected prices for buyers and more home equity for existing owners,” said Quicken Loans Chief Economist Bob Walters. “On the other hand, the housing markets are more balanced in the East and Midwest, leading owners to be slightly over enthusiastic about their home’s appreciation.”
Quicken Loans' Home Value Index (HVI), which examines home value changes based solely on appraisals, showed that in May, appraised values increased only 0.79 percent since April, but rose 4.36 year-over-year.
According to the data, home values rose in all four geographic regions measured. The West led with 6.21 percent annual growth, the South had a 3.83 percent increase, the Midwest had a 3.54 percent rise, and the Northeast had a 2.03 percent increase in the past year.
“Demand for housing coupled with a lack of choice for buyers pushed home values up yet again,” Walters said. “This is a narrative we have heard for quite some time. Many owners aren’t moving on from their current homes, which is holding back available inventory for both first time and move up buyers. With values on the rise, this could prove to be an ideal time to sell–especially in the hot markets where owners could get more than they expected.”