Gap Between Homeowner Expectations and Appraisals Narrows

October was the eighth-straight month with less than half a percentage point difference between appraisals and homeowner estimates, according to the Quicken Loans Home Price Perception Index (HPPI), which showed appraised values were an average of 0.28% lower than owners expected at a national level.

While home owners are seeing eye-to-eye with appraisers, home value growth is starting to slip. Appraised values decreased 0.55% between September and October, but have risen 4.39% since October 2017. While this is still healthy annual growth, it is the lowest year-over-year increase in the last twelve months.

Quicken Loans' HPPI, which compares appraisals to the estimated value homeowners provide at the beginning of the mortgage process, indicates a general understanding of home values nationally, with some variation across the country. The average homeowner expectation in October was 0.28% too high. This is a vast improvement over the last year, when there was nearly a 1% difference between the two data points. When viewed by the metro area, appraisals range from 2% lower than what the homeowners estimated in Chicago to nearly 3% higher than expected in Boston.

"With homeowner estimates and appraiser opinions moving more closely together, mortgages are less likely to run into snags in the process," said Bill Banfield, Quicken Loans executive vp of capital markets. "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."

Appraised values, as measured by Quicken Loans' HVI, continued to make gains over 2017 levels, despite a small monthly dip. Home values jumped 4.49% year-over-year, the smallest gain this year, but still outpacing inflation. The West posted the highest annual home value gain even though it showed the largest decline from September to October of this year. The home value growth in the Northeast is the most sluggish of all the regions, with just a 2.59% annual increase in appraised values and a 0.48% decline month-over-month.

"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," Banfield said. "Slower gains in prices can balance out changes in interest rates affecting affordability for those looking to purchase a new home."

*A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions.

*A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions.

*A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions.