Value Perceptions

Value perceptions remain close to appraisals in November

Homeowner estimates of their property's value have stayed close to appraised values throughout the year, according to the retail mortgage lender Quicken Loans. Although homeowners have consistently overestimated how much their residence is worth, they have been within 0.5 percent of the value determined by an appraiser since March.

In the latest update of its Home Price Perception Index, Quicken Loans found that the average appraisal was 0.36 percent less than what a homeowner anticipated in November. This was up from 0.28 percent in October, but an improvement over the November 2017 value of 0.67 percent.

"Homeowner perception staying at a steady level is a sign of a sturdy housing market," said Bill Banfield, executive vice president of capital markets at Quicken Loans. "Some homeowners may not be as aware of home value changes as the professionals who study the real estate market every day, so any large, sudden, spikes, or drops in home values are often reflected by a swift widening gap in the HPPI."

In the regional breakdown of homeowners' value estimates, residents in the West were most likely to have a good understanding of how much their home was worth. The average appraisal fell 0.23 percent below expectations in this region. It was 0.33 percent lower in the South, 0.4 percent lower in the Northeast, and 0.48 percent lower in the Midwest.

Quicken Loans also looks at 27 major metropolitan areas to determine value perceptions in these cities. The average appraisal was more than expected in 19 cities and lower than expected in eight cities.

Boston homeowners continued to get higher appraisals than expected, with the typical appraised value coming in 2.92 percent higher than anticipated. The average appraisal was 2.47 percent above homeowner expectations in Denver and 2.26 percent higher in Charlotte, N.C. Conversely, appraised values were 2.11 percent less than expected in Chicago, 1.1 percent lower in Philadelphia, and 1.09 percent lower in Cleveland.

Quicken Loans also looks at home values each month for an update of its Home Value Index. On a national level, the index stood at 110.35 in November – up 0.53 percent from the previous month and 5.01 percent from the previous year. A value of 100 is equal to values in January 2005.

"With interest rates higher than they were at this time last year, and signs pointing to this trend continuing, it's good to see appraisal values keeping moderate annual growth – avoiding possible affordability problems," said Banfield. "While homeowners like to celebrate increasing equity, these restrained gains—keeping closer pace with inflation and wage growth—are much healthier for the economy."

The Home Value Index was up 0.51 percent from October and 3.66 percent from November 2017 to stand at 102.87 in the Northeast. In the Midwest, the index rose 0.41 percent from the previous month and 4.53 percent from the previous year to 91.13.

The West had the strongest annual value growth, with its Home Value Index increasing to 135.06 – up 0.42 percent from the previous month and a year-over-year gain of 6.16 percent. The index in the South was 112.26, increasing 0.52 percent from October and 4.7 percent from November 2017.

Quicken Loans' Home Price Perception Index is based on its database of refinance mortgages, where a homeowner estimates their property's value and an appraised value is determined later in the process. The Home Value Index is based on both purchase and refinance mortgage data.