Homeowners and Appraisers Again Closer to Agreement on Home Values

Quicken Loans data shows that homes appraised just 0.53% lower than homeowner estimates, meaning the gap between the two narrowed again after widening for the first time in a while back in January.

Home values were down 0.07% in February, but they’ve still gone up 6.37% on the year. It’s worth noting that this is a slightly slower pace of appreciation than the 7.03% annual increase seen in January.

Home Price Perception Index (HPPI)

Although appraisals continue to come in below where homeowners expect them to be, the gap is getting smaller. Last month, it was 0.53% as opposed to 0.60% in data for January.

Quicken Loans Executive Vice President of Capital Markets Bill Banfield said that part of the reason for the continued gap may be that homeowners are fooled by nationwide data regarding home values.

“The Home Price Perception Index is a perfect example of how localized housing is across the country,” said Banfield. “The fact that appraisals are showing home values nearly 3% higher than expected in Dallas, but the average appraisal is lower than the owner estimates by almost 2% in Philadelphia, illustrates this to a tee. Dallas is an incredibly hot housing market right now and appraisers are seeing just how fast home values are climbing. When shopping for a home, or even refinancing a current mortgage, consumers should always keep the changes in their local market in mind before estimating a home’s value.”

Taking a look at regional data, homeowners in the West have the best understanding of local home values, overestimating by just 0.32%. Meanwhile, the Midwest and South follow at 0.55% and 0.58%, respectively, overestimated. In the Northeast, homeowners overvalue their properties by 0.68%.

At the local level, Dallas remains the hottest market, with appraisals coming in 2.72% higher than homeowner estimates. Meanwhile, Philadelphia homeowners are overestimating property value by 1.84% at the other end, but this is a vast improvement as homeowners and appraisers in the City of Brotherly Love are much closer today than they have been in the past. At this time last year, the difference between homeowners and appraisers was 3.09% in the city.

Homeowners in Atlanta are closest to agreement with appraisers, overestimating value by just 0.07%.

Home Value Index (HVI)

Home values fell 0.07% in February. Annual appreciation slowed slightly, but values are still up 6.37% compared to the same time last year.

Part of the reasoning for this value draft might be that more homes are (slowly) starting to make their way to the market. This might be a relief for buyers looking to purchase soon, but Banfield says there’s still not enough housing available on the market to satisfy demand.

“With little movement in the HVI data from January to February, it’s clear the same narrative from the beginning of the year remains,” he said. “Low home inventory continues to be a drag on the housing market. As the economy grows and more consumers are in the right place financially to purchase a home, the high demand is driving prices up. As we move into the spring selling season, all eyes will be on whether today’s strong economy can support the higher prices.”

Breaking the data down across regions, we see that the West was the culprit in terms of nationwide value drops, as appraised values in the region were down 1.87% on the month but have still risen 6.99% on the year. The Midwest and Northeast saw value increases of 0.42% and 0.44%, respectively, last month. These regions are up 7.23% and 5.44%, respectively, annually. Finally, the South was up 0.92% and is up 5.67% yearly.

Like what you see and ready to buy or refinance? You can apply online through Rocket Mortgage^® by Quicken Loans. If you’d rather get started over the phone, one of our Home Loan Experts would love to help you 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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