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Homeowner & Appraiser Perception Gap Widens Further in August

appraisal-two [1]Homeowners continued to overvalue their homes for the seventh consecutive month in August when compared with appraiser opinions.

Quicken Loans [2] reported in their Home Price Perception Index [3](HPPI), which compares the estimate that the homeowner supplies on a refinance mortgage application to the appraisal that is performed later in the mortgage process, that homeowner estimates were 2.65 percent higher than appraiser opinions, the largest gap in over a year.

“While the month-to-month number is interesting to examine, it is not the single most important factor of the HPPI report. Instead, the focus should be on the trend, the direction it’s heading and how fast,” said Bob Walters, Quicken Loans chief economist.

He added, “The perception trend of most of this year suggests homeowners may be assuming that home values have been in a steady, linear path upward," Walters said. "In reality, home values have remained mostly flat this year, and this false assumption may be leaving homeowners disappointed when their appraisals come in.”

Appraiser home values are higher than homeowner estimates in San Jose, California (+5.83 percent), San Francisco, California (+5.00 percent), and Denver, Colorado (+4.31 percent). Homeowner opinions are higher than appraiser estimates in Philadelphia, Pennsylvania (-3.31 percent), Kansas City, Missouri (-2.86 percent), and Chicago, Illinois (-2.39 percent).

The company also reported that national home values were almost flat in August, declining 0.05 percent from July, when values dropped 0.27 percent. Annually, home value rose 3.24 percent from August 2014, according to the Home Value Index (HVI).

The HVI reviews home value trends based only on appraisal data from home purchases and mortgage refinances, producing a wide data set that is focused on appraisals.

“The Northeast region stands out in the latest HVI findings. It is the only region with a drop in home values in August," Walters said. "Moderating home values are a welcome sign to buyers, and could be especially enticing to those looking to purchase their first home.”

Source: Quicken Loans

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