As home values continue to rise, appraisals are getting closer to what homeowners believe their houses are worth
The distance between appraiser and homeowner opinions of home values contracted for the fifth consecutive month in October, as appraisal values continued to rise, according to the Home Price Perception Index (HPPI) released by Quicken Loans.
Appraised homes values were 0.99% lower on average than the value homeowners thought they would be, according to the index. Quicken Loans said that in spite of the opinion difference, appraisals continue to increase. Across the US, there was an average 0.71% increase in home values in October – 4.76% higher than the same period in 2016.
Quicken Loans also said that the index is now closest to equilibrium since April 2015. Appraisals continued to surpass homeowner estimates in Western cities during the month, as Denver recorded appraisals 3.13% higher than expectations. Cities in the East and Midwest region were more likely to see appraisals lower than owner estimates.
"Based on the HPPI, it appears homeowners in the markets where prices are rising faster than the national average – like Denver, Seattle, and San Francisco – are continuing to underestimate just how quickly home values are rising, so the average appraisal is higher than homeowner estimate," said Bill Banfield, Quicken Loans executive vice president of capital markets. "On the inverse of that, homeowners in areas where the values aren't rising as fast may think they are rising faster than they are, leading to the appraisal lagging the estimate."
Meanwhile, the Home Value Index (HVI), which uses appraisal data to measure home value change, revealed that values rose on monthly and annual bases. Appraisals rose 0.71% month over month and jumped 4.76% year over year.
"As we enter the traditionally slower demand season in the home purchase market, persistent supply constraints may keep home prices elevated," Banfield said. "Compared to the previous year, our economy continues to improve and attract homebuyers who may have been on the sidelines during the past few years. This will add additional demand to the equation."
