Homeowners in Denial: Difference between Owner Expectation and Appraised Value Reverses Course, Widens

  • March 8, 2016
• Nationally, appraised values were nearly 2% lower than homeowner expectations.
• Gap between appraisal and owner estimates widened for first time in six months – albeit slightly.
• Home values increased 1.51% in February and rose 3.89% year-over-year, according to national HVI.

DETROIT, March 8, 2016 – Quicken Loans, the nation’s second largest retail mortgage lender, today announced home appraisals were an average of 1.99 percent lower than what homeowners expected in February, according to the company’s proprietary Home Price Perception Index (HPPI). The study compares actual appraised values to what refinancing homeowners estimated their home was worth at the beginning of the mortgage process. February brings a reversal to the previous five-month trend of a narrowing gap between the two data points.

Home values showed continued growth in February, making up for the slight dip in January. Nationally, appraised values increased an average of 1.51 percent according to the Quicken Loans Home Value Index (HVI) – the only measure of home values based solely on appraisals. The index has increased 3.89 percent when compared to February 2015.

Home Price Perception Index (HPPI)

The gap between homeowner estimates and appraiser opinions of value widened for the first time in six months. Owners’ estimates of their homes value exceeded appraiser estimates by an average of 1.99 percent in February, according the national HPPI. The areas where appraisers valued homes higher than homeowners estimated were largely found in the West. San Jose leads the group, with appraisals 4.35 percent higher than expected. On the other side of the spectrum, appraised values were 3.64 percent lower than homeowners expected in Philadelphia.

“While it is always disappointing for homeowners to learn they don’t have quite the home equity they expected, the national HPPI is still within a normal range,” said Quicken Loans Chief Economist Bob Walters. “In an ever-changing real estate market, home values fluctuate and these changes are most quickly realized by appraisers who are evaluating local sales every single day.”

Home Value Index (HVI)

Home appreciation continued when viewed nationally, and in most of the regions measured by the HVI. The nation’s average appraisal value increased 1.51 percent in February and has grown 3.89 percent since February 2015. At the regional level, the monthly growth was led by the Midwest with home values rising 3.37 percent. The South lagged with flat growth.

“A lack of inventory continues to affect home values as eager buyers compete for a small selection of homes. This can be seen as home values jump in the Midwest right as the harsh winter hits, keeping some from listing their home,” explained Walters. “Home prices continue their long march back from the big price drops experienced in the financial crash. As more and more Americans gain equity, this increases the number of homeowners who are financially able to sell their home and buy another one. We’re seeing the benefits of this virtuous cycle in rising home prices which is also being greatly aided by historically low mortgage rates.”

###

About the HPPI & HVI

The Quicken Loans HPPI represents the difference between appraisers’ and homeowners’ opinions of home values. The index compares the estimate that the homeowner supplies on a refinance mortgage application to the appraisal that is performed later in the mortgage process. This is an unprecedented report that gives a never-before-seen analysis of how homeowners are viewing the housing market. The HPPI national composite is determined by analyzing appraisal and homeowner estimates throughout the entire country, including data points from both inside and outside the metro areas specifically called out in the above report.

The Quicken Loans HVI is the only view of home value trends based solely on appraisal data from home purchases and mortgage refinances. This produces a wide data set and is focused on appraisals, one of the most important pieces of information to the mortgage process.

The HPPI and HVI are released on the second Tuesday of every month. Both of the reports are created with Quicken Loans’ propriety mortgage data from the 50-state lenders’ mortgage activity across all 3,000+ counties. The indexes are examined nationally, in four geographic regions and the HPPI is reported for 27 major metropolitan areas. All indexes, along with downloadable tables and graphs can be found at QuickenLoans.com/Indexes.

About Quicken Loans

Detroit-based Quicken Loans Inc. is the nation’s second largest retail home mortgage lender. The company closed more than $200 billion of mortgage volume across all 50 states since 2013. Quicken Loans generates loan production from web centers located in Detroit, Cleveland and Scottsdale, Arizona. The company also operates a centralized loan processing facility in Detroit, as well as its San Diego-based One Reverse Mortgage unit. Quicken Loans ranked “Highest in Customer Satisfaction for Primary Mortgage Origination” in the United States by J.D. Power for the past six consecutive years, 2010 – 2015, and highest in customer satisfaction among all mortgage servicers in 2014 and 2015.

Quicken Loans was ranked No. 5 on FORTUNE magazine’s annual “100 Best Companies to Work For” list in 2016, and has been among the top-30 companies for the last 13 years. It has been recognized as one of Computerworld magazine’s ’100 Best Places to Work in IT’ the past 11 years, ranking No. 1 in 2015, 2014, 2013, 2007, 2006 and 2005. The company moved its headquarters to downtown Detroit in 2010, and now more than 10,000 of its 15,000 team members work in the city’s urban core. For more information about Quicken Loans, please visit QuickenLoans.com, on Twitter at @QLnews, and on Facebook at Facebook.com/QuickenLoans.

Additional graphics are available below.

Print Friendly