Homeowners prefer not to believe their homes have lost value

The gap between what homeowners applying for a refinance mortgage believe their home is worth and the assessment of an appraiser, has widened.

Quicken Loans’ National Home Price Perception Index (HPPI) expanded to 0.78% in March from 0.50% in February.

"This month's fluctuation in the HPPI was driven more by a dip in home values than a change in the owners' viewpoint. Homeowners are often reluctant to believe their house has lowered in value, even at a slight monthly fluctuation," said Bill Banfield, EVP of Capital Markets for Quicken Loans.

In most areas appraisals are within 1% of homeowners’ perceptions but across the areas measured for the HPPI, Chicago is where owners are overestimating the most (1.94% above appraisals) and Boston owners are underestimating the most (2.23% below appraisals).

"Depending on the area, appraised values are either growing at a much more measured pace or have taken a step back from their meteoric rise,” added Banfield. “Homeowners are usually slower to realize change – in either direction – than the appraisers who study the market on a daily basis. This can lead to a slight widening of the perception gap when there is a turn in the market."

Home Value Index
Meanwhile, Quicken Loans’ National Home Value Index (HVI) shows appraisal values dipped 0.20% from February to March. Home values continued to grow annually, rising 3.37% year-over-year.

This is a slowdown from the growth in February, when appraised values rose 5.47% year-over year.

"Some of the rampant buyer demand that we've seen over the last few years has subsided because of the affordability issues many areas are having, driven by a lack of availability," said Banfield. "Would-be buyers have decided to sit on the sidelines to see if more home inventory becomes available at the price-points where they're shopping. The entire housing industry is watching to see what will happen in the coming months – whether owners and builders will provide the home inventory the buyers have been waiting for, amid the recent drop in interest rates."

*A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions.