Homeowners and Appraisers Nearer to Agreement as Value Growth Slows

The gap between homeowner and appraiser opinions of value continues to narrow. Last  month, homeowners overvalued homes by just 0.28%.

On the downside, home values did drop to 0.55% in October, but are still up 4.39% on the year.

Home Price Perception Index (HPPI)

For the eighth consecutive month, there’s been less than half a percentage point difference between homeowner perception of the value of their home and actual appraised value. The 0.28% difference is just slightly narrower than last month when it was 0.29%.

Quicken Loans Executive Vice President of Capital Markets Bill Banfield said that this closer level of harmony makes for a smoother home financing experience.

“With homeowner estimates and appraiser opinions moving more closely together, mortgages are less likely to run into snags in the process,” Banfield said. “With the combination of a better understanding of appraisal values, and continued home value increases, this could be a good time for homeowners to tap into their growing equity to pay off higher interest debt or make home improvements.”

Moving briefly to regional data, homeowners and appraisers were closest to complete agreement in the West, where homeowners overestimated value by just 0.13%. In the South and Northeast, homeowners overestimated home value by 0.26% and 0.36%, respectively. The Midwest wasn’t far behind, with the owners overvaluing their homes by 0.39%.

Finally, at the metropolitan level, the residential housing market in Boston is running very hot. Appraisals are coming in 2.93% above homeowner estimates. Chicago is on the other side of the spectrum, overestimating property value by 2.12%. Meanwhile, homeowners in Miami are in exact lockstep with appraisers. Both appraised values and homeowner estimates are coming in at $355,000 for the month of October.

Home Value Index (HVI)

Home values dropped 0.55% in October, but they’re still up 4.49% on the year. Although this is the lowest year-over-year increase we have into this point, it’s still far outpacing inflation.

Banfield said that a slight slowing in the pace of price growth may be a reaction to changes in the housing and financial markets.

“The pace of home price growth appears to be moderating and varies by region representing a healthy adjustment to strong price gains of the past,” he said. “Slower gains in prices can balance out changes in interest rates affecting affordability for those looking to purchase a new home.”

At the regional level, value trends were mixed. In the West, home values fell 1.28% on the month and are up 6.04% on the year. In the Northeast, values were down 0.48% for October and are only 2.59% on the year. In contrast, values were up in the Midwest at 0.06% and have risen 4.32% on the year. The South was the biggest monthly gainer, up 0.32% and 3.97% yearly.

If you’re looking to buy a home or refinance, it remains a great time to get started. You can apply online or give one of our Home Loan Experts a call at (800) 785-4788.

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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