- During the past year, appraiser and homeowner opinions have noticeably narrowed in Los Angeles.
- There and both positives and negatives for homeowners who are undervaluing the equity in their homes.
- Appraised values are also noticeably higher than homeowner perceptions in San Jose.
Last month, appraised home values in San Francisco were 3.94 percent higher than home value perceptions. This difference in value perception has remained relatively unchanged during the past year, as during December 2014 appraised values were 4.45 percent higher, a recent Quicken Loans index shows.
Nationally, average appraised homes were roughly two percent lower than owners’ home value perceptions in December; however, in San Francisco – and to a lesser extent Los Angeles – the opposite occurred.
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This continued difference of opinions indicates “there’s more upside to come,” according to Bob Walters, the firm’s chief economist.
In short, a 3.94 percent difference in value perception equates to a more than $44,000 difference of opinion when assuming a median home price of $1.19 million.
For homeowners considering a sale or currently listing this would appear to be good news. However, a nearly 4 percent difference could also cause complications for homeowners that are close to loan-to-value refinance thresholds or are looking to eliminate mortgage insurance.
“The more homeowners are in line with appraisers, and understand the equity in their home, the easier it will be to refinance their mortgage,” Walters noted.
Value perceptions in Los Angeles have balanced
In Los Angeles, the opinions of appraisers and homeowners has nearly hit an equilibrium. During December, appraised home values were only 0.74 percent higher than homeowner perceptions. Considering a median home price of $559,400, a 0.74 percent difference equates to $3,971.
“Largely appraisers and homeowners are on the same page. When this is the case it does lead to smoother transactions,” Walters said, adding if homebuyers understand how the local market is performing they will be better equipped to come in with strong offers.
Since December 2014, the difference in value perception between the two parties has narrowed in Los Angeles by roughly 2.5 percent. In December 2014, the difference in value opinions was roughly 3.25 percent, which indicates some of the “bullishness” in this market may be wearing off.
