Quicken Loans, the nation’s second largest retail mortgage lender, reported Dec. 9 that its Home Price Perception Index (HPPI) shows the opinions of homeowners and appraisers slowly are becoming more in line, on a national scale.
Additionally, Quicken Loans’ Home Value Index (HVI), a measure of home values based solely on appraisal data, made a slight increase from October to November.
The Quicken Loans HPPI showed that appraisers’ opinions of home values in November were 1.56 percent higher than homeowners’, according to the national composite. This indicates that the respective opinions are closer to equilibrium compared with October, when appraisers valued homes 1.58 percent higher than homeowners’ estimates. However, the value in November represents a larger spread than the previous year, when the difference was 1.34 percent in November 2013.
Although three-quarters of the metro areas examined had appraiser opinions higher than homeowner estimates, the difference between appraisers’ and homeowners’ opinions of value varied widely in different parts of the country. In San Jose, Calif., appraisers valued homes 6 percent higher than homeowners. Conversely, in Kansas City, Mo., appraisers’ opinions were 2.53 percent lower than homeowners’ opinions.
“Mortgage financing often hinges on whether the appraised value coincides with the home values agreed upon by the homebuyer and seller in the case of a home purchase, and the homeowner’s estimated value in the case of a refinance,” Quicken Loans Chief Economist Bob Walters said. “It is reassuring to see the gap between appraiser opinions and homeowner opinions narrow, and if we had to choose a side of the fence, it makes for a much smoother mortgage process if appraisers are valuing homes above homeowners’ estimates like we’re seeing, as compared to the opposite.”
The Quicken Loans HVI showed that home values increased by 0.27 percent from October to November, according to the national composite. Regionally, home values made only slight movements, ranging from values falling 0.19 percent in the West to a 1.23 percent increase in the Northeast.
The small increase when viewing home values nationally is not representative of Tampa, Fla; Phoenix; and Minneapolis, which saw monthly home value drops of 6.91 percent, 6.17 percent and 7.87 percent, respectively. However, the majority of metro areas had monthly home value increases, the largest of which was Boston, with an increase of 3.88 percent from October to November.
“The great differences in home value changes across the country show just how localized housing markets really are,” Walters said. “The housing market is mending at a national level, but the recovery in some areas is moving more swiftly, and [other areas] have been lagging. Homebuyers and sellers can make better financial decisions by educating themselves about their local housing markets.”