Homeowners and Appraisers Close in on Agreement

Homeowners and appraisers were much closer to agreement in March with homeowners overestimating the appraised value of their homes by just 0.36%. This represents a significant improvement from the 0.53% gap in February.

The good news didn’t end there as home values rose 1.84% in March and have risen 7.64% on the year. For those looking to refinance, this could mean the opportunity to access more equity. If you’re looking to buy, it might be a good idea to get preapproved now before prices go up as more competition hits later in the spring and summer.

Home Price Perception Index (HPPI)

When people refinance, they estimate the value of their home at the beginning of the mortgage process. Later on, a trained independent appraiser provides their own thoughts on the home’s value – this is the one used for the purposes of the loan. The closer these opinions are, the more likely a mortgage transaction is likely to go smoothly.

Not only are homeowners closer to appraiser opinion, overestimating values by a national average of just 0.36%, but in more than 80% of metro areas reviewed, appraisals were at or higher than homeowners guessed.

Quicken Loans Executive Vice President of Capital Markets Bill Banfield said that this month’s report had a lot of positives.

“This month’s HPPI is great news for homeowners who may be thinking of selling their home or using some of their equity,” said Banfield. “Not only are owners’ and appraisers’ views of the housing market getting closer together when looking at the nation as a whole, but homeowners in many major areas are building equity at a rapid pace.”

When breaking down the data by region, homeowners in the West are closest to the opinions of appraisers, overvaluing their homes by just 0.16%. It gets bunched up after that with homeowners in the Northeast, Midwest and South overvaluing their homes by just 0.39%, 0.43% and 0.44%, respectively.

At the metro level, homeowners in San Jose, California have the most undervalued homes, with appraisals coming in 2.71% above homeowner estimates. On the other end of the spectrum is Philadelphia, where homeowners are overestimating by 1.62%. However, even here the gap continues to narrow significantly. It was 1.84% last month. Homeowners in Atlanta are closest to appraiser opinion, underestimating their property value by 0.06%.

Also worth noting is that of the 27 cities surveyed, only five of the cities are continuing to overestimate the value of their homes.

Home Value Index (HVI)

When looking at the values themselves, these were up 1.84% in March compared to February, and they’ve gone up 7.64% annually.

Banfield attributes much of this increase to a lack of available homes on the market.

“A monthly increase in home values, after a stable report last month, shows that demand for the few available homes for sale ramped up in March,” he said. “The true test will be if more homeowners decide to take advantage of their higher home values and provide some much-needed inventory for buyers.”

Looking at regional data, the West was out front both on the month and on the year with increases of 3.54% and 9.99%, respectively. The South followed with a monthly increase of 1.37% and a yearly gain of 6.23%. The Northeast saw a 0.94% gain in March and is up 5.53% on the year. The Midwest gained 0.31% and is up 5.68% year-over-year.

Whether you’re looking to refinance and take advantage of increased equity or buy before prices rise again, you can apply today with Rocket Mortgage^® by Quicken Loans. Otherwise, one of our Home Loan Experts would be happy to take your call at (888) 980-6716.

The Quicken Loans Home Price Perception and Home Value Indexes are released on the second Tuesday of each month on the Quicken Loans Press Room.

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