Appraiser valuations were 1.95 percent lower than what homeowners estimated in April, according to the national Home Price Perception Index (HPPI) released by Quicken Loans. The gap between the two values narrowed since March when appraiser opinions of value were 2.17 percent lower than homeowner expectations. The HPPI is based on the company’s mortgage application and appraisal data.
Appraisers’ valuations also continued the upward trend in April. Home values dipped a slight 0.66 percent since March, but grew at a measured pace on an annual basis – rising 3.79 percent according to Quicken Loans’ national Home Value Index (HVI). The HVI is the only measure of home value change based solely on appraisals, one of the most important data points in the mortgage process.
Home Price Perception Index (HPPI)
Owners are still overestimating their home’s value, but are closer to appraisers’ opinions of value than in March. Nationally, appraised values were 1.95 percent less than what homeowners expected. Despite some fluctuations, the HPPI has spent the majority of the past year around the -2 percent mark, leaving homeowners slightly lagging the opinions of owners. While there have been monthly changes at the metro level, an underestimation of value among homeowners in the western cities has remained consistent. Homeowners in midwestern and eastern cities are seeing the opposite, consistently overestimating their home’s value.
“The HPPI is in a healthy trend, nationally,” says Quicken Loans Chief Economist Bob Walters. “While everyone wants their appraisal’s to come back showing more equity than anticipated, like some homeowners in the West, the discrepancy we are seeing now won’t likely derail a mortgage transaction.”
Home Value Index (HVI)
Owners enjoyed an annual increase in home values nationally and in all of the regions measured by the HVI, despite a national dip in values since March. Nationally, appraised values slid 0.66 percent month-over-month, but increased 3.79 percent since April 2015. The West was the only region with a monthly drop in home values, falling 1.72 percent. However, it continued to post the largest year-over-year growth with an increase of 4.86 percent.
“The steady annual increase in home values shows sustainable growth and an improving economy,” says Walters. “We always look for gains to be similar to inflationary growth while avoiding the hikes that could lead to bubble fears. We are currently in that range, which should come as a more comforting sign to many homeowners.”
For more information, visit QuickenLoans.com/Indexes.