One of the biggest problems I face when selling a home is overcoming the price expectations of sellers. Quite often, homeowners I work with in the Lower Hudson Valley have inflated opinions of the value of their homes. I've often wondered why this happens. It turns out I'm not the only realtor facing this problem.
Each month, Quicken Loans releases their national Home Price Perception Index (HPPI). This month’s report revealed that the difference in appraiser home value opinions as compared to homeowner estimates is continuing to increase. Chief Economist and Vice President of the Capital Markets Group for Quicken Loans Bob Walters explains:
"Many homeowners around the country are seeing the national headlines about home value increases and they are optimistic about their equity increasing. While some areas are seeing the same level of home appreciation, or even more, there are also some areas that have slower home value increases. This can lead to homeowners and appraisers not quite seeing eye-to-eye.”
Home sellers need to realize that national news is just that - a national average, whereas home price trends can vary tremendously according to area. Housing in New York City is a seller's market, with buyers out numbering inventory and throwing cash at sellers. Just a few miles to the north and west it's a different story, with too much inventory and still a lot of old inventory waiting to sell.
Here is a chart showing the increasing difference in opinions between seller and appraiser:
Though reports of home price increases have garnered many headlines over the last six months, most experts expect residential real estate values to start showing more historic levels of appreciation over the next five years. Walters addressed this issue:
“A slowing of home value increases adds to the misunderstanding of local home values. Appraisers are viewing the housing industry every day; they know when home values growth may be slowing. Homeowners may think values are still skyrocketing, when they have instead returned to more healthy appreciation in their area."
When pricing your home, you should have a real estate professional help you fully understand where prices are and where they are headed in the future.