Lending Real Estate

Homeowner expectations and appraisal values divided as gap widens

Hard to keep up in today's fast-paced housing market

houses neighborhood

The gap between appraisal and owner estimates widened for first time in six months, Quicken Loans said in its latest monthly Home Price Perception Index and Home Value Index for February.

However, the rise is still small, and the HPPI is still at a healthy level.

“While it is always disappointing for homeowners to learn they don’t have quite the home equity they expected, the national HPPI is still within a normal range,” said Quicken Loans Chief Economist Bob Walters. “In an ever-changing real estate market, home values fluctuate and these changes are most quickly realized by appraisers who are evaluating local sales every single day.”

Click the chart to enlarge

chart 1

(Source: Quicken Loans)

Homeowners’ estimates of their homes' value exceeded appraiser estimates by an average of 1.99% in February, according the national HPPI.

This chart shows how perception varied across different cities.

Click the chart to enlarge

chart 2

(Source: Quicken Loans)

As far as home prices, the nation’s average appraisal value increased 1.51% in February, growing 3.89% since February 2015.

At the regional level, the Midwest led the monthly growth, with home values rising 3.37%.

Click the chart to enlarge

chart 2

(Source: Quicken Loans)

“A lack of inventory continues to affect home values as eager buyers compete for a small selection of homes. This can be seen as home values jump in the Midwest right as the harsh winter hits, keeping some from listing their home,” explained Walters.

“Home prices continue their long march back from the big price drops experienced in the financial crash. As more and more Americans gain equity, this increases the number of homeowners who are financially able to sell their home and buy another one. We’re seeing the benefits of this virtuous cycle in rising home prices, which is also being greatly aided by historically low mortgage rates,” he added. 

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