Home Prices Rise–But Not as Fast as Homeowners Think

Home prices jumped again in April, said Quicken Loans, Detroit, albeit not as much as homeowners think they did–a discrepancy that has now trended for five consecutive months.

The company’s National Home Value Index, which measures home value change based solely on appraisals, showed values rose by 1.06 percent in April. Home values also increased when viewed annually, rising 5.08 percent year-over-year.

However, the National Quicken Loans Home Price Perception Index reported home appraisals were an average of 1.90 percent lower than what the owner expected, the fifth consecutive month the gap between appraiser opinions and homeowner estimates of home value.

The Value Index reported home value growth not only continued, but accelerated in April. The National HVI showed appraisal values rose 1.06 percent from the previous month and increased 5.08 percent since April 2016. This is compared to 3.30 percent year-over-year growth in March. All regions measured by the HVI show positive momentum, ranging from 3.54 percent annual growth in the Northeast to a 6.52 percent year-over-year increase in the West.

“Home values were pushed higher once again by the demand for housing outpacing the stock of available homes. This effect is intensified by the start of the spring buying season,” said Quicken Loans Vice President of Capital Markets Bill Banfield. “While sellers are obviously thrilled as their investment continues to grow in value, this trend could make homebuyers set their sights on smaller homes or less pricey neighborhoods.”

The HPPI noted wide range of perceptions persists across the country, but month-to-month change in most metros was minor. The study continues to find appraised values higher than expected in the West, while it was more likely to have appraisals lower than owners estimated in the Midwest and East.

“The appraisal is one of the most important data points in a mortgage transaction,” Banfield said. “This single number can impact how much money a buyer needs to bring to closing, or the equity that is available to the homeowner on a refinance. If homeowners have a grasp on home value differences throughout their local area, it can lead to a smoother mortgage process.”