Earlier this week, retail mortgage lender Quicken Loans released its Home Price Perception Index (HPPI) for September, revealing average homeowner estimates were coming in 1.26 percent higher than actual appraised values. Although homeowners are slightly miscalculating, the HPPI has diminished over the past three months.

  • The HPPI gauges how much homeowners are overestimating (-) or underestimating (+) their home values.
  • The HPPI has narrowed for three consecutive months, reaching -1.26 percent in September.
  • West Coast markets like San Francisco and San Jose show appraisals over 2 percent higher than homeowner estimates.

Earlier this week, retail mortgage lender Quicken Loans released its Home Price Perception Index (HPPI) for September, revealing average homeowner estimates were coming in 1.26 percentage points higher than actual appraised values. Although homeowners are slightly miscalculating, the HPPI has diminished over the past three months. Last month, the HPPI was at 1.56 percent.

Although the two sides are beginning to balance on a national scale, many homeowners remain overly optimistic. Homeowners in Baltimore and Chicago priced their properties over 2 percent higher than actual appraised value in September, the report shows, driving a negative HPPI in the metros.

homeowner estimates

PRNewsFoto / Quicken Loans

Meanwhile, in San Francisco and San Jose, homeowners undervalued their properties by over 2 percent each, producing a positive HPPI.

“When reading about the health of the economy, many consumers don’t take into account how varied housing markets can be,” Quicken Loans chief economist Bob Walters said in a statement. “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.”

Between August and September, the national home value index (HVI) dipped 0.25 percentage points after four consecutive months of rising values. However, home values are up 7.78 percentage points annually across the country, and the HPPI gap narrowed from a previous 2 percent from September 2015.

Markets in the West and South regions realized 0.31 percentage point home value growth between August and September. Meanwhile, the Midwest saw a 2.23 percentage point home value dip, while the Northeast posted a 1.42 percentage point shrink in the same period.

Despite the short-term drops in the Midwest and Northeast, all regions posted positive home value movement between 5.52 percent (Northeast) to 8 percent (West) year-over-year.

Appraisals in San Francisco are 2.34 percentage points higher than homeowner estimates on average, according to the report. Last year in San Francisco, the HPPI gap was larger, at +4.67.

Los Angeles is another metro that contradicts the national trend, with homeowner estimates 1.39 percentage points lower than appraised values. The gap reduced from 1.41 percent year-over-year.

Houston homeowners, too, are underestimating their home values, but by a lesser 0.97 percent. In September 2015, the HPPI gap was wider, at +2.9.

Negative HPPI

Washington D.C. homeowners are overestimating their values, the report shows, but only by a minimal 0.14 percentage points. Last year, D.C. home values were 0.10 percentage points higher than homeowner estimates, contrary to the negative trend posted last month.

The average appraisal in Miami is 0.22 percentage points lower than the average homeowner estimate. The gap amplified over the past year in Miami, from a -0.03 HPPI posted last September.

New York City homeowners are overestimating values by 1.31 percentage points on average, according to the report. The gap in the Big Apple is up from last year’s HPPI of -1.17.

Chicago homes are appraised for 2.08 percentage points less than what Windy City homeowners expect, but the HPPI in Chicago has slightly improved both month-over-month and year-over-year.

Baltimore homeowners overestimated their values against appraisals by 2.68 percentage points in September. Last year, Baltimore’s HPPI was narrower, at -1.95.

Email Jennifer Riner

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