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Gap Between Appraiser & Homeowner Opinions Widens in June

appraisal-two [1]For the fifth consecutive month, appraiser home value opinions dropped further below homeowner estimates in June, according to a recent report from Quicken Loans [2]. The mortgage lender reported that appraiser opinions of home values were 1.4 percent lower than homeowner estimates, according to their monthly national Home Price Perception Index [3](HPPI).

Quicken Loans' HPPI represents the difference between appraisers’ and homeowners’ opinions of home values. The index compares the estimate that the homeowner supplies on the mortgage application to the appraisal that is performed later in the mortgage process.

The Quicken Loans’ national Home Value Index [3] (HVI) reported a slight increase of 0.74 percent in June, with home values increasing in all regions of the country except for the South, which posted a decline of 0.09 percent. The index also noted that national home values are up 4.38 percent from last year. During the five-month period leading up to June, appraisers have continuously assigned home values below homeowner estimates. The gap between these opinions has increased each month, with an average 1.4 percent difference in June.

“Over the last five months we’ve seen homeowners continually value their homes higher than appraisers,” said Bob Walters, Quicken Loans chief economist. “While each local market has a different story to tell, a large part of this perception gap is likely due to the normalization of home prices. After about a year of home values trending upward, it takes some time for many homeowners to realize home values are stabilizing in their neighborhoods.”

According to the lender, home values increasing 0.74 percent in June from the month prior. Meanwhile, yearly growth has declined slightly from the annual level of the previous month, but still posted a 4.38 percent annual increase. The lender reported that the South was the only region to post a monthly decrease in home values, dropping by 0.09 percent.

“Home prices seem to be a bit frozen for the time being – validating that we are in a market that is well into the stabilization cycle,” Walters said. “The real test for home price solidity will be when inventory increases to a level of equilibrium between supply and demand.”

Click here to view Quicken Loans Home Price Perception Index & Home Value Index. [3]