Quicken Loans: Appraisal Values Lag Behind Homeowner Estimates

Quicken Loans, Detroit said homeowners across the country have a good idea what their home is worth, with the average home appraisal in August just 0.64 percent lower than what the owner expected.

The company’s National Home Price Perception Index said while the gap between the owner’s estimate and the appraisal widened a bit from the previous month, and is more than double what it was in August 2018, it is still within the range that shouldn’t cause problems in the mortgage process for most buyers or refinancing homeowners.

The report said at the local level, perception is even more promising. The majority of metro areas measured had average appraisal values higher than what the owner estimated. Of the areas where the appraised valued was lower than expected, only three of them had an average appraisal value more than 1% lower than the owner’s estimate. The Index was strongest in Boston, which had an average appraisal value 2.05% higher than expected. Chicago, yet again, lagged all metro areas with the average appraisal 1.77% lower than the homeowner’s estimate.

“Homeowner perceptions have remained in a relatively tight band, with less than a percent gap between expectations and actual appraisal values, for the last two years,” said Bill Banfield, Quicken Loans Executive Vice President of Capital Markets. “This is a good sign that homeowners have kept their finger on the pulse of their local housing market as home values continued to rise. This is a great news for those who haven’t already tapped their growing home equity.”

The Quicken Loans Home Value Index, which measures home value fluctuation based on appraisals, showed both monthly and annual increases in appraised values at a national level, showing a “healthy” 0.95% growth in home values from July to August, and a strong 4.64% year-over-year increase.

When viewed at a regional level, three of the four regions measured showed rising home values from July to August. The Northeast was the outlier, with a 0.36% dip in average appraisal value. The largest monthly gain was in the South, which had a 1.09% bump in home values. All four regions had gainful increases in home values when measures at an annual level. The Midwest led the nation in home value increases at 5.44%. The West trailed the country, but still had a worthwhile 1.93% increase in appraised values.

“Home values continue to reach levels never before seen. As the growth trend persists, the question everyone considers is whether we will have affordability issues,” Banfield said. “The good news is that the dip in interest rates, around 3-year lows, has prevented buyers from needing to adjust their budget and kept home sales strong.”