Homeowners' value perceptions steady as home price growth slows

Homeowner estimates of their property's worth continued to be closely aligned to appraised values in October despite a slowdown in home price growth, according to the retail mortgage lender Quicken Loans.

In the latest update of its Home Price Perception Index, Quicken Loans determined that the average appraisal fell just 0.28 percent below a homeowner's expectations. This was the eight consecutive month where the difference between the average estimate and appraisal was within half a percent. It was also an improvement from September, when the average appraisal was 0.29 percent less than expected, and October 2017, when it was 0.99 percent lower.

"With homeowner estimates and appraiser opinions moving more closely together, mortgages are less likely to run into snags in the process," said Bill Banfield, executive vice president of capital markets at Quicken Loans. "With the combination of a better understanding of appraisal values, and continued home value increases, this could be a good time for homeowners to tap into their growing equity to pay off higher interest debt or make home improvements."

In the regional breakdown, homeowners in the West came closest to estimating their property's value with the average perception falling just 0.13 percent short. The average appraisal was 0.26 percent less than expected in the South, 0.36 percent lower in the Northeast, and 0.39 percent lower in Midwest.

Quicken Loans also looks at value perceptions at 27 major metropolitan areas, and the average appraisal was equal to or more than the value expected by homeowners in all but six markets. Appraisals were typically 2.93 percent more than expected in Boston, 2.47 percent higher in San Jose, Calif., and 2.46 percent higher in Denver. On the other end of the spectrum, the average appraisal fell 2.12 percent short of expectations in Chicago, 1.03 percent lower in Philadelphia, and 1.02 percent lower in Baltimore.

The report also updated its Home Value Index, which stood at 109.77 for October. This was down 0.55 percent from the previous month, but a year-over-year gain of 4.36 percent.

A value of 100 is equal to values in January 2005. Quicken Loans said that while prices were appreciating at a healthy rate that outpaced inflation, the annual increase was also the smallest one in the past 12 months.

"The pace of home price growth appears to be moderating and varies by region, representing a healthy adjustment to strong price gains of the past," said Banfield. "Slower gains in price can balance out changes in interest rates affecting affordability for