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Appraisers and homeowners grew further apart on their opinions of home value despite the fact that the actual values themselves rose. This marks the third straight month that homeowners and appraisers have been more distant from harmony.

While homeowners and appraisers were 0.47% apart in terms of what homes were worth, the appraisals actually did rise 0.65% on the month.

Home Price Perception Index (HPPI)

Percentage difference between estimated home value and appraised value

The gap between homeowners and appraisers in terms of opinions on home value was up to 0.47% in January. This is a slight widening of the chasm from 0.45% in December. While still considered low, it could be the start of a lean in the wrong direction.

You begin to see this difference come into play as you look at city data. For example, in the San Francisco metro area at the beginning of last year, appraisals were coming in 2.11% higher than homeowner opinion. Fast-forward a year and these are less than 1% higher than where homeowners might expect them.

Quicken Loans Executive Vice President of Capital Markets Bill Banfield said that housing overall is still showing good rates of appreciation despite some softness in individual markets.

“It looks like the HPPI is seeing the start of a downward trend, in lock-step with pockets of moderating home values,” said Banfield. “However, with the national measure still reporting appraisals less than half of a percent lower than expected and with home values in the lowest performing metro area less than 2% lower than what homeowners estimated, the housing markets is still in a healthy place.”

On a regional basis, homeowners were still closest to the mark in the West where they only overestimated home value by 0.37%. The South and Northeast followed next with estimates overvaluing their homes by 0.46% and 0.47%, respectively. Finally, Midwest home values were overestimated by 0.62%.

Boston continues to have the hottest housing market with appraisals coming in 2.76% above homeowner estimates. In Chicago, they’re at the other end of the spectrum, overvaluing homes by 1.87%. Homeowners in Riverside, California were closest to appraiser opinions, undervaluing their homes by just 0.02%.

Home Value Index (HVI)

Homeowner Estimates and Appraiser Opinions of Home Values

Home values were up 0.65% on the month and have arisen 5.35% since last January. This is a slower pace of appreciation than last month.

Banfield thinks that some of the slowdown in price appreciation could actually be a good thing for buyers.

“While there have been some recent movements in the pace of home appreciation, the housing market is still very strong and is making positive movements across the country,” he said. “As homes in each market adjust for the rate of price appreciation, buyers and sellers may find that there is more to negotiate – and some potential complications – if the purchase price isn’t supported by the appraised value. The appraised values will be derived from recent, proximate sales, and are the leading indicator for the direction of the local market.”

Regionally, home values saw the biggest monthly increase in the South, where they were up 1.34% and have risen 6.84% annually. Meanwhile, home values in the Northeast rose 0.59% and 4.74% on the year. In the Midwest, home values declined 0.08%, but have still gone up 4.42% since January 2018. The West may be starting to show signs of downward price pressure. The region is up 3.27% on the year, but values fell 0.38% on the month.

If you like what you see, maybe you’re ready to get started with a purchase or refinance. You have the option to get started online or give us 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.

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