Quicken Loans, the nation’s second-largest retail mortgage lender, reported Feb. 10 that its Home Price Perception Index (HPPI) narrowed in January, showing that appraisers’ opinions of home values were only 0.18 percent higher than homeowners’ estimates of home value, according to the index’s national composite. This marks the closest the two opinions have been since September 2013.
The 0.18 percent discrepancy between appraisers’ opinions and homeowners’ estimates in the January HPPI narrowed since the previous month, when the difference was 1.43 percent. The two value opinions also are closer than the previous year, when appraiser opinions were 2.11 percent higher than homeowner estimates.
Appraiser and homeowner opinions on value narrowed in more than 66 percent of the metro areas examined. Despite the trend toward agreement in value, appraisers in more than 74 percent of the metro areas evaluated continue to experience higher opinions of home values than the homeowners. This means that homeowners still could have more equity in their home than they realize.
“Interest rates have dropped, and we have seen more and more Americans refinance their mortgage. These consumers have been watching their local housing market and realizing their home’s true value more accurately than any time in the last year-and-a-half,” Quicken Loans Chief Economist Bob Walters said. “This is encouraging, but I urge homeowners to continue to watch the ebbs and flows of the market, especially in their neighborhood, so they understand the direction of home values in their community when it comes time to sell.”
In addition to the value perception gap closing, home values are on the rise. Following a slight decrease of home values in December from the month prior, the Quicken Loans Home Value Index (HVI) made positive movement in January, increasing 1.94 percent, according to the national composite. Home values also increased 5.63 percent in January compared with the previous year.
According to the Quicken Loans Home Value Index (HVI) national composite, every region measured by the HVI saw home value gains. The largest increase came from the Midwest, with monthly growth of 2.62 percent and a 9.31 percent annual home value increase.
“The rebound from December’s dip in home values shows that the economy is slowly regaining its health and finding solid footing,” Walters said. “Homeowners are becoming more confident in the housing market and the economy as a whole. All eyes will be on home inventory in the spring and summer to see if the added equity will push more homeowners off the fence and provide the impetus to put their home on the market.”