Quicken Loans Study Shows Steadily Widening Gap Between Appraisal Values and Homeowners’ Perception

  • March 12, 2019
• Quicken Loans’ National HPPI shows appraised values 0.50% lower than homeowners estimated in December
• Home values rose 0.05% nationally in December, and posted a 5.47% year-over-year increase, according to the Quicken Loans HVI

DETROIT, March 12, 2019 – February marks the fourth consecutive month the gap between owner estimates and appraiser opinions of home value has widened, although the difference is still small at a national level. Appraisal values in February were an average of 0.5 percent lower than what homeowners expected, according to the National Quicken Loans Home Price Perception Index (HPPI).

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Home value perception continues to vary at a metro level, but remains in a relatively tight band. Of the metro areas that had average appraisals lower than expected, none of them were more than 2 percent lower than the owner’s estimate. At the other side of the spectrum, Boston is the outlier with the average appraisal 2.51 percent higher than what the homeowner expected – which could add more than $11,000 in equity based on local median home prices. Charlotte follows closely behind, surprising the average homeowner with an appraisal 2.10 percent higher than what they estimated. In total, 62 percent of the metro areas are reporting average appraisals higher than expected.

“Even though the home value perceptions are declining at a national level, the majority of metro areas are getting appraisals at, or above, what the homeowner expected,” said Bill Banfield, Quicken Loans Executive Vice President of Capital Markets. “This is particularly exciting news at a time when we are seeing heighted interest in cash out refinances. More and more, owners are choosing to invest in their home by making improvements instead of moving. If appraisals are higher than expected an owner could find it more comfortable to do those home improvements they always had in the back of their mind.”

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Home values were practically frozen in the height of winter. The National Quicken Loans Home Value Index (HVI), the only measure of home value changes based solely on appraisals, reported the average appraisal increased a mere 0.05 percent in February. Annual growth continues to be strong, with year-over-year growth of 5.47 percent – increasing at a higher clip than in January.

The regional appraisal changes are a mixed bag. No region saw appraisal values swinging more than half a percent in either direction. Appraisals were an average of 0.33 and 0.50 percent higher in the West and the Northeast, respectively. However, values dipped 0.25 and 0.56 percent in the Midwest and the South. On the other hand, all regions have year-over-year growth in common – ranging from a 3.72 percent increase in the Midwest, to a 5.60 percent jump in the West.

“Home values are still making modest annual gains, despite being practically stagnant when measured monthly. What everyone has their eye on is what will happen as the spring selling season kicks off,” said Banfield. “Home prices, and in turn home values, are mostly driven by the balance of how many homes are on the market and the volume of buyers vying for them. Most of the industry is expecting the demand will remain high, like in years past, but what remains to be seen is how many owners will choose to list their home – creating availability for both first time and move up 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 largest home mortgage lender. The company closed nearly half a trillion dollars of mortgage volume across all 50 states from 2013 through 2018. Quicken Loans moved its headquarters to downtown Detroit in 2010. Today, Quicken Loans and its Family of Companies employ more than 17,000 full-time team members in Detroit’s urban core. The company generates loan production from web centers located in Detroit, Cleveland and Phoenix. Quicken Loans 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 the country for customer satisfaction for primary mortgage origination by J.D. Power for the past nine consecutive years, 2010 – 2018, and also ranked highest in the country for customer satisfaction among all mortgage servicers the past five consecutive years, 2014 – 2018.

Quicken Loans was once again named to FORTUNE magazine’s “100 Best Companies to Work For” list in 2019 and has been included in the magazine’s top 1/3rd of companies named to the list for the past 16 consecutive years. In addition, Essence Magazine named Quicken Loans “#1 Place to Work in the Country for African Americans.”

For more information and company news visit QuickenLoans.com/press-room.

Additional graphics are available below.

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