Homeowners across the country continue to view their property value higher than appraisers' opinions. In July, the average spread between an owner's estimate and the appraised value was 1.55% according to Quicken Loans' National Home Price Perception Index (HPPI). Despite the national average, the range of perceptions varied across the country with valuations coming in higher than expected in some metro areas.
Homeowner estimates in June were 1.70% lower than appraised values. HPPI tracks differing trends across the country as real estate often fluctuates on a local basis. On average, appraisals were higher than owner expectations - the inverse of the national trend – in some of the fastest growing housing markets, including Dallas and Denver. However, some metro areas in the Northeast and the Midwest regions reported appraised values lower than owner estimates at a higher rate than the national trend.
"The home appraisal is one of the most important data points in the mortgage process. It determines the level of equity the homeowner has and, if the owner's estimate is too far from how the appraiser views the property, it can cause the mortgage to be restructured," said Bill Banfield, Quicken Loans Executive Vice President of Capital Markets. "Our hope is that this index is eye-opening for homeowners. Their home equity could be thousands of dollars higher, or lower, than they realize. If they are aware of the perceived trends in their area it could help them better prepare for their home purchase or refinance."
The Quicken Loans National Home Value Index (HVI) reported that appraised values increased an average of 0.33% from June to July. The growth is even stronger on a year-over-year basis, with home values rising 4.21% nationally from July 2016's findings. All of the areas measured also annual home value growth – ranging from a 2.65% annual increase in the Northeast to a 5.64% annual rise in value in the West.
"The regional differences in home value growth mirror the perception difference across the country. Areas with slower growth were more likely to have owners overestimating their home value, and areas with much stronger growth had higher appraisals than owners realized they would be," said Banfield. "With home values constantly changing, and the rates of change varying across the country, this is one more way to show how important it is for homeowners to stay aware of their local housing market."
