Closing the Gap | Homeowners’ Value Estimates Move Closer to Appraised Values
Historically, owner perception of home values has varied from the actual appraised values―but the difference has never been this low in three years. The latest Home Price Perception Index (HPPI) from Quicken Loans explained homeowner estimates are just 0.33% higher than appraised values, whereas this time last year they were 1.90% higher. The data illustrates sellers should be less shocked post-appraisal.
“The appraisal is one of the most important, although sometimes least predictable, parts of the mortgage process,” said Bill Banfield, Quicken Loans Executive Vice President of Capital Markets. “The Home Price Perception Index is a way to illustrate the differences of opinion, and these differences affect everything from the type of mortgage a borrower can get to the expectations a seller has about the proceeds available upon sale of their home.”
Of the areas measured for the HPPI, Quicken Loans reports “less than 20 percent…have appraised values lower than estimated. San Jose is leading the way with the average appraisal 2.75 percent higher than expected and Chicago is trailing all cities with appraisals an average of 1.68 percent lower than estimated.”
One factor for the closing gap could be the 6.47% year-over-year increase reported in the Quicken Loans Home Value Index (HVI). Experts believe that homeowners might not be fully informed regarding home value increases and therefore not taking the growth into consideration when it comes to their own home values.
“This month’s HPPI is great news for homeowners who may be thinking of selling their home, or using some of their equity,” said Banfield. “Not only are owners’ and appraisers’ views of the housing market getting closer together when looking at the nation as a whole, but homeowners in many major areas are building equity at a rapid pace.”
Read the analysis of the entire report here.