Home value continues to grow, but not to sellers’ expectations

Home values in August saw an increase of 1.73 percent compared to July, and an increase of 8.13 percent compared to August 2015, according to Quicken Loans Home Value Index.

“Competition in the housing market has been especially hot this summer, causing home values to climb,” said Quicken Loans Chief Economist Bob Walters. “This spike can concern some buyers, as the increases are outpacing inflation and wage increases, leading to affordability problems in some of the hottest markets. However, the pace of home value increases will likely slow as we move into the colder months and there is more balance between buyers and sellers.”

Yet, homeowners continue to overestimate their home’s value. Appraisals were 1.56 percent lower than owners’ anticipated price. Last month, homeowners overestimated the value by 1.69 percent, so the gap is closing, the report said. Across the country, homeowners’ perceptions and appraisals estimates ranged from the same to 3 percent.

“While a one and a half percent difference may not seem like a big disparity of home value opinions, the gap could cause problems, especially in areas with an even wider difference,” added Walters. “In some portions of the Midwest, where appraisals are averaging 2-3 percent less than what was expected, this will often lead to restructuring a refinance or the homeowner needing to bring a few more thousand dollars to the closing table.”

In Pennsylvania, Philadelphia homeowners had a significantly higher estimate on their homes than appraisers did. The study found that homeowners overestimated the value of their home by 3.24 percent. However, this is a decrease from both July and August 2015.