Home value perception retains accuracy in May

Homeowners' perceptions of their property's value grew slightly farther apart from appraised values in May, but this gap was less than half a percent for the third month in a row.

In the latest calculation of its Home Price Perception Index, the retail mortgage lender Quicken Loans determined that the average appraisal was 0.34 percent less than a homeowner expected. This was up from 0.33 percent lower than expected in April and 0.36 percent lower than expected in March.

Quicken Loans noted that perceptions were considerably better than the same month in the previous year, when the gap between expectations and appraisals was more than five times greater. In May 2017, the typical appraisal fell 1.93 percent below expectations.

Value perceptions varied by market. In the Northeast, the average appraisal was 0.49 percent less than expected. Typical appraisals fell 0.41 percent lower in the Midwest, 0.37 percent lower in the South, and 0.13 percent lower in the West.

The report also looks at 27 metro areas in the United States to gauge value perceptions in major cities across the nation. In May, the average appraisal was more than a homeowner was anticipating in all but five cities.

San Jose, Calif., had the largest perception gap in favor of homeowners, with the average appraisal coming in 2.82 percent greater than expected. The average appraisal was 2.41 percent higher than anticipated in Boston, 2.35 percent higher in Dallas and Denver, and 2.25 percent higher in San Francisco.

On the other end of the spectrum, appraisals in Chicago were 1.69 percent lower than the average homeowner expected. Typical appraisals were 1.49 percent less than anticipated in Cleveland, 1.33 percent less in Baltimore, and 1.28 percent less in Philadelphia.

In a separate assessment known as the Home Value Index, Quicken Loans set a figure of 108.86. This was up 0.71 percent from April and 6.56 percent from May 2017. An index of 100 is equal to values in January 2005.

Values were up in each region in May. The Northeast had the strongest growth, with its index of 103.74 marking an increase of 4.33 percent from the previous month and 8.42 percent from the previous year.

In the West, values rose 1.41 percent from April and 6.3 percent from May 2017 to an index of 131.68. The figure of 111.02 in the South was up 1.05 percent from April and a year-over-year jump of 6.42 percent. The Midwest's index of 89.96 was up 1.09 percent from April and 5.91 percent from May 2017.

"As we hit peak real estate season, the number of eager buyers continued to outpace the number of homes that were available, which has led to surges in appraisal values across the country and especially in the Northeast," said Banfield. "The only remedy is to accelerate the pace of construction to fill this need."

The Home Price Perception Index is based on refinance mortgage applications, which require a homeowner to estimate their property's value and later include a value determined by a professional appraisal. The Home Value Index is determined using a database of both purchase and refinance mortgages.