Quicken Loans Study Shows Home Appraisal Value Lags Owner Estimates by a Wider Spread for Second Consecutive Month

  • February 14, 2017
• Quicken Loans’ National HPPI shows appraised values were 1.47% lower than homeowners estimated in January
• Home values rise 3.93% year-over-year nationally, despite slight drop from previous month, according to the Quicken Loans HVI

DETROIT, February 14, 2017 – For the second consecutive month, the gap between homeowner estimates and appraiser opinions has widened. Quicken Loans’ National Home Price Perception Index (HPPI) showed the average appraisal value was 1.47 percent below what owners expected in January. This two-month drop in the HPPI comes on the heels of a six month stretch where opinions between homeowner and appraiser were steadily moving closer to equilibrium.

Appraisal values in January stayed mostly flat, slipping only 0.34 percent last month according to Quicken Loans’ Home Value Index (HVI). When viewed annually, appraised values continue to rise, increasing 3.93 percent year-over-year.

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Home Price Perception Index (HPPI)

According to the National HPPI, the value homeowners estimated at the beginning of the refinance process was an average of 1.47 percent lower than the value assigned by appraisers. Even though the composite value dropped, there continues to be variation across the country. Home appraisals in many of the western cities are outpacing owner expectations. In Denver, for example, appraised values were 2.98 percent higher than homeowners expected. Conversely, estimates from those in some of the eastern cites were higher than appraised values. This included Philadelphia, where appraisals were 2.94 percent lower than homeowners estimated.

“Having a good understanding of the conditions in their local housing market can be a valuable tool for consumers as they prepare for the home buying or mortgage process,” said Quicken Loans Chief Economist, Bob Walters. “Accurate expectations at the onset of the mortgage process, not only makes it smoother, but can prevent unexpected changes in the amount of funds to bring to the closing table if the appraised value comes in lower than initially estimated.”

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Home Value Index (HVI)

Home values have leveled off as the winter months carry forward. According to the National HVI, the average appraisal dipped a modest 0.34 percent from December to January. From an annual perspective, home values have risen 3.93 percent. Regionally, appraised values in the Northeast dropped the most month-to-month, but the main storyline continues to be robust annual growth in the West, while the Midwest lags behind.

“Tight inventory has been a key contributing factor to the year-over-year growth in home values,” said Walters. “This steady growth could very well lead to more availability, driving homeowners to consider cashing in on their growing equity by putting their home on the market. When this happens, it will open up new opportunities for eager buyers.”

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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 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 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.

Additional graphics are available below.

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