Monday Facts – Home Value Decisions Are a Pricey Pickle

MONDAY FACTS

June 30, 2015

 

HOW HOME VALUE DECISIONS ARE CAUSING A PRICEY PICKLE – from an Inman article by Steve Cook

 

  • A study scheduled to publish this fall from the Journal of Housing Economics found that homeowners overprice their homes by an average of 8%. Those who bought during the peak “bubble” years of 2004-2006 overprice by as much as 12%

  • The tendency to overestimate capital gains makes homeowners more susceptible to adverse shocks.

  • A Federal Reserve report last year found that income levels skew homeowner perception of home prices. 28% of homeowners making less than $40,000/year expect values in the neighborhood to increase while 51% of homeowners making over $100,000 expect values to increase.

  • Quicken loan compared appraised values with the value homeowners put on their application. In April, appraised values fell below homeowner valuation for the 3rd straight month. This could be why only 51% of re-fi’s were approved last year.

  • NAR’s 2014 Profile of Home Buyers and Sellers showed that 17% of recent sellers had to delay or stall the sale of their home because the value was less than the mortgage.
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