Corporate Settlement Solutions (CSS), an Ohio-based full-suite provider of commercial and residential real estate settlement solutions, recently released results from an analysis across 10 states that showed home appraisals were higher than sale prices 51 percent of the time in the first half of 2024.
The analysis provided the percentage of homes that were over-appraised, under-appraised and appraised at the same value as the sale price within $2,500, CSS said in a press release. It focused on the 10 states with the highest volume across CSS’ footprint which includes 19 states and the District of Columbia.
The gap between appraisals and sale prices is the highest it has been since the start of the pandemic in 2020. That year, according to CSS data, 42 percent of homes were appraised above the sale price compared with 42 percent in 2021, 46 percent in 2022 and 50 percent in 2023. As of June 2024, the average over-appraisal was 9 percent among all markets analyzed.
“The growing gap between home appraisals and actual sale prices underscores the challenges of providing accurate valuations in a rapidly appreciating market with limited inventory,” CSS CEO Ashley Jelinek said in the release. “The big question is, how long will this continue given that many housing economists are suggesting that home appreciation is normalizing and, in some markets, even decreasing. It is inflection points like the one we may be approaching that emphasize the importance of accurate, market-centric valuations.”
Among the 10 states analyzed, Kentucky had the highest percentage of orders (73 percent) that were appraised over the sale price for the first half of 2024 with an average over-appraised value of 10 percent. New York had the lowest percentage of homes (34 percent) with an average over-appraised value of 5 percent. North Carolina had the highest average over-appraised value at 33 percent.
In the under-appraised category, New York had the highest percentage of homes (14 percent) that were under-appraised with an average under-appraised value of 9 percent for the first half of 2024. Virginia had the lowest percentage of homes (3 percent) with an average under-appraised value of 9 percent.