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Homeowners Miss Mark When It Comes to Appraised Value

Homeowners again overvalued their homes in May, missing the mark by 1.93 percent, according to the latest Quicken Loans’ National Home Price Perception Index (HPPI). The gap has now widened six months in a row.

The latest Quicken Loans National Home Value Index (HVI) shows appraised values rose 4.92 percent year-over-year in May.

“It’s important for consumers to see the HPPI and not only think about the difference in perceptions, but the different perceptions across the country,” says Bill Banfield, executive vice president of Capital Markets at Quicken Loans. “Home values, and home value changes, vary widely depending on the city you’re in. Homeowners, and those looking to buy a home, should keep a close eye on their local market to better understand home values in their area, and the trend they are on.”

A summary of the HPPI:
At the beginning of the mortgage process, a homeowner estimates what their home is worth. Later in the process, an appraiser reviews the home, and the local comparable sales, to establish their opinion of the home’s value. The Quicken Loans HPPI showed that owners’ home value estimates were an average of 1.93 percent below appraisers’ opinions of the value at a national level. There was a slight widening between the two data points since April, when there was a 1.90 percent difference. May is the sixth month the two valuations moved farther apart. Despite the national average, perceptions varied across the country. In Denver or Dallas, appraisals were nearly 3 percent higher than expected, while in Philadelphia or Baltimore, appraised values were more than 3 percent lower than what homeowners estimated.

A summary of the HVI:
Home values rose at a national level, and in much of the country, according to the Quicken Loans HVI, which measures home value changes based solely on appraisals. Nationally, appraised values increased 0.63 percent from their level in May, and rose 4.92 percent when viewed annually. The Northeast was the only region measured that showed a home value loss, with appraisals dropping 1.63 percent since the previous month; however, all four regions had year-over-year gains, ranging from a 1.15 percent increase in the Northeast to a 6.85 percent increase in the West.

“The strong demand for housing paired with the low levels of inventory continue to push values higher,” Banfield says. “Prices are rising as values push higher, making many parts of the country enticing markets for sellers. Many owners will find that they can get more than expected out of their home.”

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

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