An impressive start to the 2017-18 campaign has seen Valencia win nine of their 12 league matches - remaining unbeaten in the process - to sit four points behind Barcelona at the top of the table.
Los Che will welcome Barcelona to the Mestalla on Sunday looking to cut the gap to one point, and Villa, who represented both teams as a player, has placed Valencia as the slight favourites.
"I believe Valencia have a small advantage for the match," Villa told Valencia CF radio. "Being at home, in the Mestalla, is a massive factor anytime the club play and I believe this gives them a slight edge.
"At this moment in time, these two teams are the best in Spain and that's not only based on their league positions but also what they have shown so far in their matches this season.
"This will be a great game between two sides at a very high level who should both be fearful of each other. I hope the best team wins, I have a lot of love for my old clubs."
Barcelona won both league matches between the two teams last season - including a 3-2 success at the Mestalla in October 2016.