Appraisals

Homeowner estimates continue to align with appraisals

The value placed upon a residence by the average owner continued to align closely with the figure determined by an appraiser in July, according to the latest Home Price Perception Index report by the retail mortgage lender Quicken Loans.

The average home appraisal during the month was 0.28 percent lower than a homeowner's estimate. This was up slightly from June, when the average appraisal was 0.25 percent less than expected, but a considerable improvement from July 2017, when the average appraisal was 1.55 percent under what a homeowner expected.

"The story the HPPI is currently telling is of an ever-strengthening housing market," said Bill Banfield, executive vice president of capital markets at Quicken Loans. "With more appraisals meeting, or even reaching beyond, the level homeowners were expecting it's clear home values in the majority of areas have recovered to the point where the owners' personal view is finally lining up with the appraisers' expert view."

Price perceptions showed little variation in the different regions of the United States. The average appraisal was 0.35 percent less than expected in the Midwest, 0.33 percent lower in the Northeast, and 0.3 percent lower in the South. Homeowners in the West were most likely to set an accurate value, with appraisals in the region falling just 0.14 percent below expectations.

Quicken Loans also looks at perceptions in 27 major metropolitan areas. Appraisals were greater than expected in all but six of these cities.

San Jose, Calif., continued to be a hot market, with the average appraisal coming in 2.91 percent higher than what a homeowner expected. Average appraisals were 2.83 percent higher than expected in Denver and 2.75 percent higher in Boston.

On the other end of the scale, Chicago residents were most likely to be unpleasantly surprised by the appraised value, which typically fell 1.58 percent below a homeowner's estimate. Appraisals were 1.56 percent less than expected in Cleveland and 1.36 percent lower in Baltimore.

In the latest update of its Home Value Index, Quicken Loans set the index of 108.82. This was down 0.6 percent from June, but a year-over-year gain of 4.86 percent. A reading of 100 indicates values equal to those in January 2005.

"The HVI is telling a similar story of the housing market's health," said Banfield. "Other than some small monthly shifts, home values continue to grow at an annual

pace exceeding inflation. This can hurt affordability and hinder first-time buyers from entering the market.”

In the Northeast, the region’s Home Value Index stood at 101.09. This was up 0.72 percent from the previous month and 2.78 percent from the previous year.

The Midwest was the only region with some drop in values, which were down 1.01 percent from June. However, the Midwest still experienced annual growth of 4.04 percent as its index rose to 90.04.

The Home Value Index of 110.65 in the South marked an increase of 0.35 percent from the previous month and 4.46 percent from the previous year. The West had the strongest growth, with its index rising 1.15 percent from June and 6.68 percent from July 2017 to 133.53.

Quicken Loans’ Home Price Perception Index is based on a database of refinance mortgage applications, which require a homeowner to estimate the value of their property; an appraised value is determined later in the process. The Home Value Index is based on data from both refinance and purchase mortgages.