1. Home
  2. Blog
  3. Mortgage News
  4. The Gap Between Homeowner Estimates and Appraisals Narrows in June
Rustic Chic House

As of June 25, 2018, we’ve made some changes to the way our mortgage approvals work. You can read more about our Power Buyer ProcessTM.

For the first time in seven months, the difference between homeowner estimates of home value and appraisal values came closer together. Homeowners overestimated value by 1.7%.

Looking at the home values themselves, they rose 1.25% in June and are up 5.35% on the year.

Home Price Perception Index (HPPI)
The Gap Between Homeowner Estimates and Appraisals Narrows in June - Quicken Loans Zing Blog

Appraisers and homeowners came closer to agreement on home values in June. Homeowners’ estimates came in at 1.7% higher than appraisal, but this was 0.23% closer than they were in May. This is the first time in seven months that the gap has narrowed.

Quicken Loans Executive Vice President of Capital Markets Bill Banfield said that the closer homeowners can come to actual values, the smoother their purchase or refinance process will be.

“While a 1% or 2% difference in home value opinions may not seem like a lot, it could be enough to derail a mortgage,” said Banfield. “A homeowner could be forced to bring more cash to closing in order to make a mortgage work if the appraisal is lower than expected. On the other hand, if an appraisal comes in higher, they could be surprised with more equity than they had planned. Either way, if owners are aware of their local markets, it will lead to smoother mortgage transactions.”

Taking a look at the regional data, homeowners in the West remain closest to actual appraisal values, overestimating by just 1.39%. The South comes next, with homeowners off by 1.74%. Estimates in the Northeast and Midwest are running close together with gaps of 1.83% and 1.86%, respectively.

Homeowners in Denver continue to have the most undervalued homes, with their estimates coming in 2.54% below those of appraisers. Philadelphians are continuing to struggle in getting a handle on local home values. Their homes are overvalued by 3.26%. Kansas City, Missouri deserves a special commendation this month. Homeowner estimates are matching average appraisal values on the dot: It’s impressive.

Finally, it’s also worth noting that in the majority of the cities surveyed, homeowners were actually underestimating their home value. The surprise may actually be pleasant for some.

Home Value Index (HVI)

The Gap Between Homeowner Estimates and Appraisals Narrows in June - Quicken Loans Zing Blog

Home values rose 1.25% nationwide in the month of June and were up 5.35% on the year. If you’re a home buyer, know that it’s still a seller’s market. If you’re looking to refinance, it could be a great time to pull out equity with a cash-out refi.

Banfield said some of the pricing spike is seasonal but additional things may have to happen to bring the market back in equilibrium.

“As we get later into the spring and summer selling season, there are less and less homes available for sale, driving prices higher,” he said. “What’s clear is that the demand for housing is strong in much of the country. With interest rates remaining historically low, this could be the time for a homeowner to move on to the new-construction home they had their eye on. If they do so, it would open home options for first-time home buyers entering the market. The additional inventory could lead to more balanced prices, moving away from the spike in annual growth we have seen lately.”

In terms of regional data, prices were hottest in the Midwest, up 1.65% in June. They’ve risen 5.93% on the year in the region. The South was up 0.87% and 5.28% annually. The West was up 0.76% and has the steepest price appreciation year-to-year, up 6.12%. Home values in the Northeast were down 1.18% in June. Values are only up 2.17% yearly.

If you’re looking to buy, you may want to do so before home values rise further. On the other hand, if you’re looking to convert some equity into cash, it’s a really good time to do so. You can get a purchase preapproval or complete refinance approval online through Rocket Mortgage® by Quicken Loans®. You can also get started over the phone by giving one of our Home Loan Experts a call at (800) 785-4788.

The Quicken Loans Home Price Perception and Home Value Indexes are released on the second Tuesday of each month on the Quicken Loans Press Room.

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *