Appraisal Values vs. Homeowner Perceptions

Homeowners’ perceptions of their homes values are falling closely in line with appraised values, according to the latest Quicken Loans National Home Price Perception Index, released recently. In fact, in many major metros, appraisal values are actually coming in slightly higher than homeowner estimates.

Appraised values were just 0.34 percent lower than homeowners across the nation expected in May, which according to the report is a “vast improvement” from a year ago when the gap was five times wider.

In three-quarters of the 27 metros examined in Quicken’s index appraisal values were higher than homeowners’ expectations.

In five metros appraisal values were more than 2 percent higher than homeowner perceptions of their home’s value: San Jose, California; Boston, Massachusetts; Dallas, Texas; Denver, Colorado; and San Francisco, California. In fact, San Jose’s appraiser values were close to 3 percent higher than homeowner perceptions of value at 2.82 percent.

In all four major regions of the country, the gap between appraisal values and homeowner perceptions was less than 1 percent. This is in contrast to a year ago when the smallest gap was 1.63 percent, which was recorded in the West.

Again this May, the gap between appraiser values and homeowner perceptions was smallest in the West, where appraiser values were just 0.13 percent lower than homeowner perceptions.

The gap was widest in the Northeast, where appraisal values were 0.49 percent lower than homeowners expected.

The Quicken Home Value Index rose 0.71 percent over the month and 6.56 percent over the year in May, which Quicken called “healthy growth” for the 12-month period ending in May. Quicken’s Home Value Index measures home values based on appraisal data across the nation.

Appraisal values rose in three of four regions in May, falling only in the West, where they decreased 1.41 percent from April to May.

The greatest increase in appraisal values took place in the Northeast, where values rose 4.33 percent over the month.

Appraisal home values rose 1.05 percent in the South and 1.09 percent in the Midwest over the month of May.

Home values rose in every region over the year in May with the Northeast leading the charge with an 8.42 percent increase and the West trailing with a 6.30 percent increase.

The South and Midwest fell between with increases of 6.42 percent and 5.91 percent, respectively.

This year’s home buying season will be challenged by inventory shortages as “the number of eager buyers continued to outpace the number of homes that were available, which has led to surges in appraisal values across the country and especially in the Northeast,” said Bill Banfield, EVP of Capital Markets at Quicken Loans.

“The only remedy is to accelerate the pace of construction to fill this need,” he said.