Home value perceptions have remained steady, with owner expectations lagging appraiser opinions by about a half percent for the past few months, according to the latest Quicken Loans’ National Home Price Perception Index (HPPI). In October, appraisals were an average of 0.45 percent lower than what homeowners expected. The data also show that the slow march toward perfect balance continued. The gap between the average owner estimate and appraiser opinion narrowed each of the last three months.
There is a spectrum of home value perception across the country, but most homeowners are not likely to be shocked by their appraisal. The appraisals in all the metro areas measured were less than 2 percent lower, or higher, than expected. They range from appraisals that were an average of 1.64 percent lower than expected in Chicago, to appraisals an average of 1.40 percent higher than what the homeowners estimated in Charlotte.
“While most areas in the have not hit equilibrium for home price perception, there is stability in much of the country,” says Bill Banfield, executive vice president of Capital Market for Quicken Loans. “With such a small difference between appraised values and estimated values, homeowners are less likely to run into snags in the mortgage process when refinancing or buying a new home.”
Homeowners are keeping pace of home values even as they rise, as shown by the Quicken Loans Home Value Index (HVI), the only measure of home values based exclusively on home appraisals. Despite home values being essentially stagnant, dipping 0.04 percent from September to October, the annual measure shows appraisals rose 7.07 percent since October 2018.
At a regional level, the West made the largest monthly drop, falling 0.75 percent since September, but rising 6.07 percent year-over year. The Northeast was the only area with a bump in value, with appraisals rising a nascent 0.08 percent in October. At an annual level, the South lagged the country with a 3.77 percent increase year-over-year.
“The leveling off we saw in October is actually a welcome sign, especially to first-time homebuyers who are focused on affordability,” says Banfield. “An ideal economic equilibrium would be steadily increasing home values that keep pace with inflation and wage growth. This year’s lower interest rates and the moderating level of home prices has improved affordability despite low a low supply of homes for sale.”