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Appraised Figures Fail to Impress Homeowners

Appraised figures came in 1.70 percent below what homeowners expected in June, according to the latest Quicken Loans’ National Home Price Perception Index (HPPI)— the first time in seven months perceptions of value moved closer toward alignment.

The latest Quicken Loans National Home Value Index (HVI) shows appraised values rose 5.35 percent year-over-year in June.

“While a 1 or 2 percent difference in home-value opinions may not seem like a lot, it could be enough to derail a mortgage,” says Bill Banfield, executive vice president of Capital Markets at Quicken Loans. “A homeowner could be forced to bring more cash to closing in order to make a mortgage work if the appraisal is lower than expected. On the other hand, if an appraisal comes in higher, they could be surprised with more equity than they had planned. Either way, if owners are aware of their local markets, it will lead to smoother mortgage transactions.”

A summary of the HPPI:
Owners are still estimating their homes at higher values than the appraisal, although the spread is now slightly narrower. Nationally, appraisals were an average of 1.70 percent lower than what homeowners thought they would be, as measured by the HPPI. This is compared to June when estimates were 1.93 percent higher. There is a wide range of perceptions across the country. The Midwestern and Eastern regions kept with the national trend of a lower appraiser opinion. On the flip side, the Western markets were more likely to have owners underestimate their home value.

A summary of the HVI:
June was another month of strong home-value growth. According to the National HVI, appraised values rose 1.25 percent from May. Annual growth was even stronger with 5.35 percent year-over-year increases in value. The only region that didn’t show a monthly increase in appraisal values was the Northeast, with a 1.18 percent drop; however, all regions showed annual gains, ranging from 2.17 percent in the Northeast to a 6.12 percent increase in the West.

“As we get later into the spring and summer selling season there are less and less homes available for sale, driving prices higher,” Banfield says. “What’s clear is that the demand for housing is strong in much of the country. With interest rates remaining historically low, this could be the time for a homeowner to move on to the new-construction home they had their eye on. If they do so, it would open home options for first-time homebuyers entering the market. The additional inventory could lead to more balanced prices, moving away from the spike in annual growth we have seen lately.”

For more information, please visit QuickenLoans.com/Indexes.

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