Homeowners overestimated their property value by just 0.25% in July. This is the closest homeowner estimates and appraisal values have been since February 2015.
On the downside for homeowners, home values fell back 0.63% in June but still posted a 4.57% increase over the same time a year ago.
Home Price Perception Index (HPPI)
Homeowners and appraisers are coming tantalizingly close to agreement. The 0.25% difference represents a huge narrowing of the gap from the previous year when appraisals came in 1.70% lower than homeowner expectations.
Quicken Loans Executive Vice President of Capital Markets Bill Banfield said that it’s important for homeowners to take a close look at their local home values.
“The appraisal is an underappreciated, but highly important, part of the mortgage process,” said Banfield. “If the appraisal conducted near the end of the financing process doesn’t come close to, or surpass, what the homeowner estimated at the beginning, the entire transaction could need to be reworked. We hope the Home Price Perception Index will not only bring attention to the importance of the appraisal but cause consumers to think critically about home value trends in their community.”
Taking a brief look at regional trends, homeowners in the West actually found themselves in positive territory, with appraised values coming in 0.04% above their expectations. In the South, homeowners overestimated by just 0.30%, followed by homeowners in the Northeast, off by 0.33%. Midwestern homeowners brought up the rear, overvaluing their homes by 0.42%.
When you look at the data at a metropolitan level, nearly 75% of the areas measured had appraisals coming in higher than homeowner expectations. The hottest market in June was San Jose, California, where appraisals were coming in 3.25% above homeowner estimates. Chicago homeowners were on the other side of things, inflating property value by 1.69% in estimates. Miami homeowners are closest to harmony with appraisers, overvaluing homes by just 0.05%.
Home Value Index (HVI)
Home values were down 0.63% in June, but they’ve still increased 4.57% on the year.
Banfield isn’t worried about the dip in prices.
“The home value growth in June reflects a much healthier housing market than we have seen in years’ past,” he said. “Some fluctuation month to month is normal for a well-functioning real estate market. The annual appraisal changes are also in a healthy range. This slow rise, not straying too far from the inflation rate, helps keep control of affordability.”
At the regional level, prices were up 1.11% in the Midwest and have risen 5.35% on the year. It was joined in gains by the West, which was up 0.25% and 5.76% yearly. Prices fell 0.68% in the South, but are still up 4.78% on the year. The Northeast skewed the numbers in a negative direction this month, down 3.25% in June. Still, values in the region are up 3.68% annually.
Whether you’re looking to buy or refinance, this market makes it a great time to get started. You can get an online approval through Rocket Mortgage® by Quicken Loans or give one of our Home Loan Experts a call at (888) 980-6716 and we would be happy to help.
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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