Gap Between Appraisals and Perceived Home Value Narrows in September

By Newsroom America Staff at 12 Oct 2016

(Newsroom America) -- Quicken Loans says appraisals lagged behind what homeowners estimated by 1.26 percent in September, according to the company's national Home Price Perception Index (HPPI).

This is a slight move toward equilibrium after a 1.56 percent gap between perceptions in August. September marks the third time in as many months the HPPI has moved closer to agreement between homeowners and appraisers.

Nationally, home values made a slight dip in September, as measured by Quicken Loans' Home Value Index (HVI). Average appraisals fell 0.25 percent from August, but increased a robust 7.78 percent since September 2015.

Home Price Perception Index (HPPI)

Quicken Loans' HPPI, the only comparison of home value perception differences between homeowners and appraisers, showed while homeowners are still a bit more optimistic, the two are moving closer to agreement. In September the national HPPI reported homeowner expectations were an average of 1.26 percent below actual appraised values.

The national HPPI average does not reflect the reality in all areas of the country. For instance, the fast growing markets of Denver, San Francisco and San Jose had appraised values higher than what homeowners estimated. On the flipside, in Philadelphia, Baltimore and Chicago, appraisals were lower than what homeowners believed they would be.

"When reading about the health of the economy, many consumers don't take into account how varied housing markets can be," said Quicken Loans Chief Economist Bob Walters. "If a homeowner in Philadelphia hears about the housing boom out west, they could be surprised when their home doesn't sell at the price they thought it would. I encourage homeowners to work with real estate agents, lenders and other experts to determine their home's value."

Home Value Index (HVI)

Home values continued a steady march up, despite a slight dip in September. The average appraisal was 0.28 percent lower in September than August, but 7.78 percent higher year-over-year. The drop in home values comes after four straight months of increases. At a regional level, the West and South made small gains with a 0.31 percent growth each. However, appraised values fell in both the Midwest and Northeast with decreases of 2.23 and 1.42 percent respectively. Despite the monthly variations, all regions reported increasing annual growth in home values ranging from 5.52 percent growth in the Northeast to an 8 percent rise in the West.

"This small decrease in home values is not a signal of a turning tide, it just shows the volatility that can come with changing seasons," said Walters. "As the summer came to a close, the intense competition for available homes began to abate and home values dipped as a result. It's important to focus on the annual picture. The strong yearly growth negates monthly changes and shows we are moving in the right direction."

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