Homeowners’ Value Perception Takes a Tumble

After seizing positive numbers for seven months straight, the disparity between an appraised value and homeowners’ expectations of the said value expanded in January, according to Quicken Loans’ National Home Price Perception Index (HPPI).

The National HPPI found appraised values to be an average of 0.6 percent lower than the estimated number homeowners are asked to give at the start of the mortgage process.

Perception, however, isn’t always reality: The Quicken Loans Home Value Index (HVI)—a measure of home value change that’s based on appraisal data—actually recorded increasing home values. Appraisal values lifted 0.46 percent nationwide from December to January. On an annual basis, those numbers look even better, with home values leaping 7.03 percent from January 2017.

While it goes without saying folks probably aren’t dancing a jig over January’s decrease, that month’s National HPPI value is greatly improved compared with the same time last
year. Back in January 2017, appraiser opinions charted 1.47 percent lower than owner expectations.

Bill Banfield, Quicken Loans EVP of Capital Markets, puts it all in perspective. “The appraisal is one of the most important pieces of data in the mortgage process. Often the entire transaction hinges on the appraisal showing a number similar to what the homeowner estimated at the beginning of the process,” he said. “If the appraisal is lower, it could mean the homeowner needs to bring additional cash to close, or the loan may need to be reworked. It’s very promising to see the homeowner estimate and the appraiser opinion so close together.”

In terms of home equity, every U.S. region touted annual appraisal growth, with the West continuing to be the best. The one region that lost value was the South, which posted a 0.54 percent downturn from December to January.

“Low inventory of homes available for sale and a growing economy has led to steadily rising home values as indicated by the strong annual increase of the HVI index,” Banfield said. “The recent increase in interest rates could test affordability in the short run, but the desire to own a home remains on firm ground and may ultimately help normalize the inventory issues.”