Appraiser’s valuations were 1.14% lower in September than what owner’s expected – according to the National Quicken Loans Home Price Perception Index (HPPI).
In a separate metric, even though home values may not have risen to the level owners expected, they kept rising. Quicken Loans’ Home Value Index (HVI), the only measure of home value change based solely on appraisal data, showed home values increased 0.44% from August to September, and jumped 3.38% since September 2016.
September was the fourth consecutive month the gap between the appraisal and expectation narrowed, as perceptions moved closer to equilibrium. There is still a wide variety of home value perceptions across the country. From Dallas, where appraisals are an average of 2.87% higher than expected, to Philadelphia, where the average appraisal is 2.89% lower than what the owner thought it would be.
“An appraisal can vastly impact the mortgage process. This number alone can impact how much a buyer needs to bring to closing, or the current equity a homeowner has when refinancing,” said Bill Banfield, Quicken Loans Executive Vice President of Capital Markets. “If homeowners are aware of local home values and how they are changing, it will assist with a smoother mortgage process.”
The average home valuation was 3.38% higher than the same time last year. Regionally, all areas showed annual home value growth, from 2.08% in the South to 5.77% in the West. Monthly, however, the South did have a 1.33% drop in September.
“Home values are highly impacted by the balance of buyer’s interest and the volume of available homes. Currently this is highly tilted, with a lack of home inventory – leading to rising values,” said Banfield. “One of the most impactful things that could be done to achieve stability is an increase in new home building. If move-up buyers move on to new construction, it will open up starter homes for first time buyers.”
