Gap Narrows Between Homeowners’ Perceptions and Appraised Value

Gap Narrows Between Homeowners’ Perceptions and Appraised Value

The average home appraisal in May was 0.79% lower than what the owner estimated, according to the Quicken Loans Home Price Perceptions Index. While a lower-than-expected appraisal is never welcome news, this difference between homeowner estimates and appraisal values is slightly smaller in April, and the first improvement following six months of growing gaps between the two data points.

 

Just as the national average shows a small difference between what owners and appraisers think, none of the metro areas studied had appraised values 2% lower than what owners were expecting. In May, Philadelphia trailed all other cities, with the average appraisal 1.74% lower than what the owner estimated. There is also a new leader among those with a positive HPPI value with Charlotte boasted an average appraisal value 1.99% higher than expected.

“An appraisal can cause a variety of emotions from curiosity of the value, to frustration if it comes in too low and even surprise if the appraised value shows more equity than the homeowner realized, said Bill Banfield, Quicken Loans Executive Vice President of Capital Markets. “Luckily there wasn’t a lot of frustrated homeowners in May since the home price perception index values across the country are in a relatively tight band, showing that appraisals are not likely to cause much of a disruption in the mortgage process.

This is, however, a reminder to homeowners that they should always keep an eye on the home sales around them to get a realistic gauge of their home value before estimating what it could be.”

Quicken Loans’ Home Value Index (HVI) shows that appraisal values reversed course from April’s large increase. The nation’s average home appraisal was 1.10% lower than in April, nearly erasing last month’s growth. The annual measure, on the other hand, continued its positive momentum, with home values rising 3.54% year-over-year at a national level.

The bulk of the national drop in appraisal values came from the West, where home values were 1.74% lower in May than in April. The Midwest, with a month-over-month increase of 0.47%, is the only region with home value growth. All regions continued annual appraisal value increase – ranging from a meager 0.07% bump in the Northeast, to a 4.68% year-over-year jump in the Midwest.

“Winter’s long hibernation is definitely over for Midwest homebuyers,” Banfield said. “They’re hitting the streets and competing for a persistently low home inventory, which is leading to appraisal value spikes. The annual increase is a very positive sign, showing the growth is more than just seasonality.”

HVI

May 2019

January 2005 = 100

HVI

May 2019

vs.

April 2019

% Change

HVI

May 2019

vs.

May 2018

% Change

HPPI

May 2019

Appraiser Value vs. Homeowner Perception of Value*

HPPI

May 2018

Appraiser Value vs. Homeowner Perception of Value*

National Composite

112.71

-1.10%

+3.54%

-0.79%

-0.34%

*A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions.

Geographic Regions

HVI

May 2019

January 2005 = 100

HVI

May 2019

vs.

April 2019

% Change

HVI

May 2019

vs.

May 2018

% Change

HPPI

May 2019

Appraiser Value vs. Homeowner Perception of Value*

HPPI

May 2018

Appraiser Value vs. Homeowner Perception of Value*

West

136.32

-1.74%

3.52%

-0.74%

-0.13%

South

114.66

-0.72%

3.28%

-0.76%

-0.37%

Midwest

94.17

0.47%

4.68%

-0.80%

-0.41%

Northeast

103.81

-0.38%

0.07%

-0.89%

-0.49%

*A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions.

Metropolitan

Areas

HPPI

May 2019

Appraiser Value vs. Homeowner Perception of Value*

HPPI

April 2019

Appraiser Value vs. Homeowner Perception of Value*

HPPI

May 2018

Appraiser Value vs. Homeowner Perception of Value*

Charlotte, NC

+1.99%

+1.93%

+1.35%

Boston, MA

+1.72%

+2.08%

+2.41%

Minneapolis, MN

+1.19%

+1.16%

+1.91%

Denver, CO

+0.98%

+1.25%

+2.35%

Las Vegas, NV

+0.87%

+0.88%

+0.92%

San Jose, CA

+0.78%

+0.95%

+2.82%

Seattle, WA

+0.62%

+0.95%

+1.88%

Atlanta, GA

+0.48%

+0.65%

+0.10%

Dallas, TX

+0.43%

+0.68%

+2.35%

San Francisco, CA

+0.34%

+0.53%

+2.25%

Phoenix, AZ

+0.01%

+0.21%

+0.32%

Washington, D.C.

-0.01%

+0.05%

+0.59%

Portland, OR

-0.02%

+0.21%

+0.95%

San Diego, CA

-0.02%

+0.18%

+1.35%

Sacramento, CA

-0.05%

+0.11%

+0.95%

Los Angeles, CA

-0.29%

-0.18%

+0.78%

Houston, TX

-0.34%

-0.24%

-1.08%

New York, NY

-0.38%

-0.37%

+0.77%

Kansas City, MO

-0.47%

-0.22%

+1.20%

Riverside, CA

-0.55%

-0.48%

+0.93%

Tampa, FL

-0.57%

-0.74%

-0.06%

Baltimore, MD

-0.86%

-0.89%

-1.33%

Detroit, MI

-0.97%

-0.82%

+0.82%

Miami, FL

-1.03%

-0.96%

+0.44%

Chicago, IL

-1.51%

-1.79%

-1.69%

Cleveland, OH

-1.70%

-1.95%

-1.49%

Philadelphia, PA

-1.74%

-1.44%

-1.28%

*A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions.

About the HPPI & HVI

The Quicken Loans HPPI represents the difference between appraisers’ and homeowners’ opinions of home values. The index compares the estimate that the homeowner supplies on a refinance mortgage application to the appraisal that is performed later in the mortgage process. This is an unprecedented report that gives a never-before-seen analysis of how homeowners are viewing the housing market. The HPPI national composite is determined by analyzing appraisal and homeowner estimates throughout the entire country, including data points from both inside and outside the metro areas specifically called out in the above report.

The Quicken Loans HVI is based solely on appraisal data from home purchases and mortgage refinances. This produces a wide data set and is focused on appraisals.

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