Homeowners Frequently Misjudge Property Values, Impacting Financial Decisions
Homeowners routinely overestimate or undervalue their properties by significant margins, with 5% erring by $53,000 or more on the high end, according to a Federal Reserve Bank of Boston study. These valuation inaccuracies correlate with increased spending and conservative investment behaviors.
Misaligned home equity perceptions distort critical financial decisions—from borrowing to retirement planning. Even professional appraisals and platforms like Zillow frequently miss actual transaction prices, with Zillow's estimates still deviating by 5% or more in 16% of cases.
The Ripple effects extend beyond individual households. When aggregated, these miscalculations influence broader economic health through skewed consumption patterns and credit markets.
