Perception Is Everything: Quicken Loans study finds appraisers view home values nearly 2% lower than owners estimate

  • July 12, 2016
• Quicken Loans National HPPI: appraised values were 1.93% lower than homeowners estimated in June
• Home values increased 0.84% in June and rose 4.47% year-over-year, according to the national HVI.

DETROIT, July 12, 2016 – Quicken Loans, the nation’s second largest retail mortgage lender, today announced home values assigned by appraisers were 1.93 percent lower than what homeowners estimated in June, according to the company’s national Home Price Perception Index (HPPI). The difference between value perceptions from appraisers and owners has slightly widened since May, when appraised values were 1.89 percent lower than expected.

Home valuations across the country rose in June, as reported by the Quicken Loans Home Value Index (HVI). The average home appraisal increased 0.84 percent since May and enjoyed a 4.47 percent boost since June 2015.

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Home Price Perception Index (HPPI)

The June HPPI shows appraised values are 1.93 percent lower nationally than what homeowners estimated. While this isn’t a large discrepancy, the gap between expected and actual appraisal values grew slightly since May. The perception of home value varies widely across the country. Appraisals show home values higher than owner expectations by as much as 3 percent in Denver but, in contrast, were more than 3 percent lower in Baltimore, Detroit and Philadelphia.

“Perception is everything. It can make or break a home sale or mortgage refinance,” said Quicken Loans Chief Economist Bob Walters. “That’s why it’s so important for homeowners to realize how they perceive their home’s value could vary widely from how an appraiser views it. If the estimate is lower by just a few percentage points, the buyer could need to bring as much as another several thousand dollars to the table to avoid having to restructure the loan.”

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Home Value Index (HVI)

Continuing the slow upward march, appraised values rose by 0.84 percent from May to June – as measured by the national HVI. Home values are making stronger annual gains, rising 4.47 percent since June 2015. The regional data shows equally robust growth. Each of the four regions measured displayed modest monthly gains and more meaningful year-over-year growth. The West remains the leader with a 5.84 percent annual increase in appraised value. The Northeast posted the smallest increase with a rise of 2.07 since last year.

“Nationally, home value increases are well within the healthy range,” said Walters. “Although, the variances across the country can influence owners’ perception. Owners in the West, where appraised values are rising more quickly, tend to underestimate their home’s value. The opposite is true for those in the Northeast, with appraised values showing slower growth.

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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 $220 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 12 years, ranking No. 1 in 2016, 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.

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