Difference between Owner Expectation and Appraised Value Widens
Home values showed continued growth in February, making up for the slight dip in January. Nationally, appraised values increased generally 1.51 percent according to the Quicken Loans Home Value Index (HVI) – the one measure of home values based solely on appraisals. The index has risen 3.89 percent in comparison to February 2015.
Home Price Perception Index (HPPI)
The visible difference between homeowner estimates and appraiser opinions of worth widened for the first time in six months. Owners’ estimates of their homes value exceeded appraiser estimates by typically 1.99 percent in February, according the national HPPI. The areas where appraisers valued homes more than homeowners estimated were largely located in the West. San Jose leads the group, with appraisals 4.35 percent higher than expected. On the other side of the spectrum, appraised values were 3.64 percent lower than homeowners expected in Philadelphia.
“While it is always disappointing for homeowners to discover they don’t have quite the home equity they expected, the national HPPI continues to be inside of a normal range,” said Quicken Loans Chief Economist Bob Walters. “In an ever-changing real estate market, home values fluctuate and these changes are most quickly realized by appraisers who will be evaluating local sales each and every day.”
Home Value Index (HVI)
Home appreciation continued when viewed nationally, and in most of the regions measured with the HVI. The nation’s average appraisal value increased 1.51 percent in February and it has grown 3.89 percent since February 2015. For the regional level, the monthly growth was led by the Midwest with house values rising 3.37 percent. The South lagged with flat growth.
“A lack of inventory continues to affect home values as eager buyers compete for a small selection of homes. This can be viewed as home values jump in the Midwest right as the harsh winter hits, keeping some from listing their property,” explained Walters. “Home prices continue their long march back from the big price drops experienced in the financial crash. As more and more Americans gain equity, this increases the number of homeowners who are financially in a position to sell their house and purchase another. We’re seeing the benefits of this virtuous cycle in rising home values which is also being greatly aided by historically low mortgage rates.”
About the HPPI & HVI
The Quicken Loans HPPI represents the difference between appraisers’ and homeowners’ opinions of house values. The index compares the estimate which the homeowner supplies on a refinance mortgage application to the appraisal that is performed later while in the mortgage process. It is an unprecedented report that provides a never-before-seen analysis of precisely how homeowners are viewing the housing market. The HPPI national composite is determined by analyzing appraisal and homeowner estimates throughout the entire country, including data points from both inside and outside the metro areas specifically called out in the above report.
The Quicken Loans HVI is the only view of home value trends based solely on appraisal data from home purchases and mortgage refinances. This produces a wide data set and it is focused on appraisals, one of the more important pieces of information to the mortgage process.
The HPPI and HVI are released on the second Tuesday of each and every month. The two of the reports are produced with Quicken Loans’ propriety mortgage data with the 50-state lenders’ mortgage activity across all 3,000+ counties. The indexes are examined nationally, in four geographic regions and the HPPI is reported for 27 major metropolitan areas.