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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.

Across the U.S., homeowners continue to overvalue their home in comparison to appraisers, but the gap is narrowing. Homeowners overestimated property value by 1.55% in July.

Home values are also continuing their upward trend, rising 0.33% last month and 4.21% since last July. Knowing your home value is a huge help when you look to buy or refinance.

Home Price Perception Index (HPPI)

Quicken Loans Survey Shows Opinions of Appraisers and Homeowners Narrow on Home Value - Quicken Loans Zing Blog

Appraisals were below homeowner expectations by 1.55%. Still, this is an improvement over the 1.70% difference in June. Real estate values are heavily influenced by local trends and in many of the hottest markets, appraisals actually came in above homeowner expectations, but in other major areas, they were quite a bit lower.

Quicken Loans Executive Vice President of Capital Markets Bill Banfield discussed the importance of paying attention to home appraisals.

“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 Banfield. “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.”

On a regional basis, homeowners in the West were closest to actual property value, with their estimates coming in 1.30% higher than appraisal values. The South followed with a difference of 1.53%. The Midwest and Northeast brought up the rear at 1.68% and 1.73%, respectively.

Breaking down the metro data, Dallas has supplanted Denver as the nation’s hottest housing market with appraisal values coming in 2.83% higher than homeowner expectations. Philadelphia and Baltimore are tied at the low-end, with their estimates coming in 3.04% higher than appraisers. Homeowners in Riverside, Calif. are the closest to the target, overestimating home value by just 0.02%.

Home Value Index (HVI)

Quicken Loans Survey Shows Opinions of Appraisers and Homeowners Narrow on Home Value - Quicken Loans Zing Blog

Homeowners will consider this good news. Property values continued to rise, up 0.33% in July. They’ve risen 4.21% nationwide on the year.

Despite the trend, Banfield said values are actually varying widely depending on where you live.

“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,” he said. “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.”

Home values are up 1.60% for July in the Northeast. The region is still playing catch-up, though, with only 2.65% annual growth. The South was next, up 0.67% and 4.34% on the year. It was followed by the West, which has 5.64% annual price appreciation and was up 0.28% for the month. Finally, homeowners in the Midwest saw their property values rise 0.23% and 3.63% on the year.

There are a couple of takeaways here. If you’re a homeowner, it’s a great time to use your equity and refinance if you’ve been thinking about it. On the other hand, if you’re looking to buy, you may want to do so now before prices go up. Rates still look great as well.

If you’re looking to get started, you can get a preapproval to buy a home or get a complete refinance approval online through Rocket Mortgage® by Quicken Loans®. If you’d like to get started over the phone instead, one of our Home Loan Experts would be happy to take your 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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