Homeowners, Appraisers Closer to Seeing Eye-to-Eye

History has shown that homeowners typically value their homes at a higher price point than appraisers, but as the housing market evolves, these opinions are inching closer to reaching a point of equilibrium.

Quicken Loans' Home Price Perception Index (HPPI) found that homeowners valued their homes 1.75 percent more than appraisers in January 2016, marking a full year that this trend had continued. Last month, the gap between home values and appraisers was 1.80 percent.

"Homeowners across America are understanding their home’s worth more as the gap between homeowner estimates and appraiser opinions narrows," Quicken stated.

Between mid-2013 and 2015, was the only time since 2007 that appraisers valued homes more than homeowners. This rare occasion ended at the start of 2015 and homeowner opinions continued to increase through mid-2015, up until the reversed directions and headed toward an equilibrium point between homeowners and appraisers.

January 2016 will mark the fifth month that the national HPPI has moved toward a point of equality among homeowners and appraisers, but Quicken says that "homeowners and appraisers in many metro areas still do not see eye-to-eye." This rings true particularly in the Western region, where "homeowners are continuing to underestimate the value of their home as they struggle to keep up with rising home values."

“It’s always important to understand your local real estate market,” said Quicken Loans Chief Economist Bob Walters. “If home values are growing in the area, homes may be gaining equity faster than consumers realize. On the other hand, if the local market is struggling, the appraisers–who are most aware of home value changes–may recognize this before homeowners come to terms with reality.”

The HPPI gap continues to narrow, but home values declined in January 2016, according to Quicken Loans’ National Home Value Index (HVI). Home values decreased 0.42 percent since December, although year-over-year growth continued with an increase of 3.37 percent. Western and Southern regions experienced modest gains, while the Northeast and Midwest showed small declines month-over-month and year-over-year.

“Home valuations continue to rise as the economy strengthens and buyers find homeownership often cheaper than renting,” Walters explained. “The number of potential homebuyers outpaced sellers in some markets. On the other hand, some areas are more balanced, producing slower grow or even a slight decline in some months. It is important to remember that tepid growth is not a cause for concern, but rather a sign of a healthy and sustainable market.”

Click here to view the full report.