Home Value Perception Reverses Course, Gap Between Owner Estimates and Appraisals Widens

  • January 10, 2017
• Quicken Loans’ National HPPI shows appraised values were 1.33% lower than homeowners estimated in December
• Home values fell 1.19% in December, but increased 3.85% year-over-year, according to the National HVI

DETROIT, January 10, 2017 – The gap between homeowner estimates and appraiser opinions widened for the first time in six months. Quicken Loans’ National Home Price Perception Index (HPPI) showed the average appraisal value fell 1.33 percent below owner expectations in December. This widening of opinions between homeowner and appraiser is a reversal of the narrowing trend that dominated the second half of 2016 as homeowner and appraiser opinions had been moving steadily closer.

While perceptions lost some ground, appraisal values also slipped last month. The average home value was 1.19 percent lower in December than in November, According to Quicken Loans’ Home Value Index (HVI). However, appraised values continue to rise on an annual basis, increasing 3.85 percent year-over-year.

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Home Price Perception Index (HPPI)

Americans’ expectation of their home’s value was an average of 1.33 percent lower than appraisers who valued their home, according to the National HPPI. The gap between actual appraised value and opinions had been narrowing since June, but December’s perception difference of 1.33 percent erases all improvement made in the last few months. Despite the drop in the composite value, significant variations in value continue in various regions of the country – highlighting the regional nature of the real estate market. For instance, estimates from Philadelphia homeowners were 2.94 percent higher than appraised values. On the other end of the spectrum, appraisals are outpacing expectations of Denver homeowners by 3.04 percent.

“It’s our hope that homeowners use the HPPI’s unique data as an insight into their local housing market,” said Quicken Loans Chief Economist Bob Walters. “When consumers have a better grasp of their local market conditions, it can help influence their expectations and ultimately lead to a smoother mortgage or home sales process.”

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Home Value Index (HVI)

As snow began to fall in much of the country, so did home values. The average appraisal value dropped 1.19 percent from November to December, according to the National HVI. Despite the dip from the previous month, home values continued to climb higher year-over-year by 3.85 percent, nationally. However this growth is a slower pace than the 5.28 percent annual increase in November. Appraised values showed strongest annual growth in the West, while the Midwest had the slowest gains.

“Home value growth has been mostly driven by enthusiastic buyers vying for a smaller than usual inventory of properties,” said Walters. “Appraised values have dipped along with the seasonal decline in sales around the winter months. It’s yet to be seen if value growth will build as sales rise in the spring, or as construction increases.”

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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 has closed nearly $300 billion of mortgage volume across all 50 states between 2013 and the end of 2016. 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 seven consecutive years, 2010 – 2016, and highest in customer satisfaction among all mortgage servicers the past three years, 2014 – 2016.

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.

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