Quicken: Homeowner, Appraisal Perceptions No Longer on Same Page

Quicken Loans, Detroit, reported a widening gap between homeowners’ perception of their homes value and that of appraisers in March.

The company’s monthly National Home Price Perception Index reported homeowners’ average estimate of their home’s value stayed consistent in March, while appraised values dipped, widening the gap between them by more than 50 percent since February. The HPPI said the average appraisal was 0.78 percent lower than homeowners expected, compared to the previous month when appraisers’ opinions were 0.50 percent lower than what owners estimated.

Bill Banfield, Quicken Executive Vice President of Capital Markets, said despite the widening difference between homeowners’ and appraisers’ opinions, owners shouldn’t be too surprised in most of the country’s metro areas. Nearly 60% of areas measured received appraisals that were within 1 percent higher or lower than what was expected.

“This month’s fluctuation in the HPPI was driven more by a dip in home values than a change in the owners’ viewpoint,” Banfield said. “Homeowners are often reluctant to believe their house has lowered in value, even at a slight monthly fluctuation. Depending on the area, appraised values are either growing at a much more measured pace, or have taken a step back from their meteoric rise. Homeowners are usually slower to realize change–in either direction–than the appraisers who study the market on a daily basis. This can lead to a slight widening of the perception gap when there is a turn in the market.”

The report said Boston remains highest where appraisals are coming back higher than estimated. On the flipside, Chicago continues to remain at the bottom of the list with the average appraisal nearly 2 percent less than the homeowner expected.

Quicken said at a regional level, home values followed a similar blueprint, making minuscule monthly moves and modest annual increases. The least-performing area was the South, with a 1.45 percent dip in appraisal values. The largest month-to-month growth was in the West, where home values increased by 0.79 percent. The annual growth ranged from a 2.19 percent year-over-year increase in appraisal values in the West, to a 4.11 percent annual rise the Midwest.

“Some of the rampant buyer demand that we’ve seen over the last few years has subsided because of the affordability issues many areas are having, driven by a lack of availability,” Banfield said. “Would-be buyers have decided to sit on the sidelines to see if more home inventory becomes available at the price-points where they’re shopping. The entire housing industry is watching to see what will happen in the coming months–whether owners and builders will provide the home inventory the buyers have been waiting for, amid the recent drop in interest rates.”