Quicken Loans, the nation’s second-largest retail mortgage lender, reported appraiser home value opinions continued to fall below homeowner estimates in April, according to the company’s Home Price Perception Index (HPPI).
The Quicken Loans HPPI represents the difference between appraisers’ and homeowners’ opinions of home values. The index compares the estimate that the homeowner supplies on the mortgage application to the appraisal that is performed later in the mortgage process.
The trend of a widening gap between appraiser and homeowner opinions continued in April, according to the Quicken Loans study of home value perceptions. The HPPI showed appraiser opinions of value were 0.69 percent below homeowner estimates. The index dipped compared with March, when appraiser opinions were 0.40 percent below homeowner estimates. April marks the third consecutive month of appraiser opinions falling below homeowner estimates.
“While it is not surprising to most appraisers that homeowners are overestimating their home’s value on a national average, we should always make note of the direction the trend is heading to help set expectations for homebuyers and those looking to refinance,” Quicken Loans Chief Economist Bob Walters said. “There is nothing more disappointing to a homeowner than learning that the value of their home is less than they expected. This index is an important tool for lenders and homeowners alike as they set reasonable expectations for obtaining a mortgage.”
The national Quicken Loans Home Value Index (HVI), a measure of home values based solely on appraisals, increased in April after a drop in March, gaining 0.28 percent nationally.
The Quicken Loans HVI is a view of home value trends based solely on appraisal data from home purchases and mortgage refinances. This produces a wide data set and is focused on appraisals.
Values also continued their strong year-over-year increases, rising 5.54 percent since April 2014 on a national level. The West region had the largest annual gain of 6.58 percent, while the Northeast posted the smallest increase with a 2.39 percent annual gain.
“Home values increased in April; however, it was not enough to cancel out March’s decline,” Walters said. “Homeowners that are still underwater are looking for large increases, but those increases can, in fact, price homebuyers out of the market. Home affordability could become a worry if home values increases get too far ahead of the modest pace of wage increases, which are sitting at about 2 percent annually.”