Consumers “Too Optimistic” About Home Values

Appraisals continued to lag homeowner expectations in August, although the difference between appraiser and owner opinions has narrowed. Quicken Loans’ National Home Price Perception Index (HPPI), which compares homeowners’ initial estimates and appraisers’ opinions of home values, showed that appraised values were 1.35 percent lower than homeowners’ expectations in August. This is compared to July when there was a 1.55 percent difference.

While perceptions of home values vary, the values themselves are constantly changing. Home values ticked up 0.19 percent in August, according the Quicken Loans’ National Home Value Index. When viewed annually, values rose an average of 2.64 percent compared to August 2016.

Home Price Perception Index (HPPI)

A home’s value, or its perceived value, can influence whether the owner decides to sell the home, refinance or even access some of their equity. However, the HPPI shows not all homeowners understand their home’s current value. Nationally, appraisals in August were 1.35 percent lower than homeowners’ valuations. Regionally, value perceptions vary widely across the country, from home values being 3 percent higher than homeowners estimated in the West, to 3 percent lower than expected in the Midwest and Northeast. A 3 percent difference may seem small, but depending on the local market, it could make a significant impact on value. For instance, a homeowner in Denver may have upwards of $11,000 in additional equity they can access for home improvements or loan consolidation.

“One of the biggest lessons from the HPPI, is highlighting how regionalized real estate is,” said Bill Banfield, Quicken Loans Executive Vice President of Capital Markets. “Homeowners who have a better understanding of their local housing market can make more informed decisions about their home. After all, their house is not just where they live, but one of their bigger assets.”

Home Value Index (HVI)

Home values rose again in August, although at the slowest pace in 2017. The HVI, the only measure of home value changes based solely on appraisals, reported that home values increased 0.19 percent in August. Appraisals posted stronger growth when viewed at a year-over-year basis, increasing 2.64 percent. At a regional level, there was a slight downturn in home values in the South and East – dipping 0.52 percent and 0.58 percent, respectively. The Midwest and West regions each had rising appraisal values, increasing 0.16 percent and 1.34 percent.

“As the sun sets on the summer, some of the intense competition for housing also winds down,” said Banfield. “It’s important to focus on the annual numbers with the HVI. While there can be some monthly variations in the data, especially as seasons start to change, the annual numbers show healthy growth across the country.”

HVI

August 2017

January 2005 = 100

HVI

August 2017

vs.

July 2017

% Change

HVI

August 2017

vs.

August 2016

% Change

HPPI

August 2017

Appraiser Value vs. Homeowner Perception of Value*

HPPI

August 2016

Appraiser Value vs. Homeowner Perception of Value*

National Composite

103.98

+0.19%

+2.64%

-1.35%

-1.56%

*A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions.

Geographic

Regions

HVI

August 2017

January 2005 = 100

HVI

August 2017

vs.

July 2017

% Change

HVI

August 2017

vs.

August 2016

% Change

HPPI

August 2017

Appraiser Value vs. Homeowner Perception of Value*

HPPI

August 2016

Appraiser Value vs. Homeowner Perception of Value*

West

126.85

+1.34%

+5.08%

-1.17%

-1.23%

South

105.38

-0.52%

+3.77%

-1.32%

-1.60%

Midwest

86.68

+0.16%

+2.62%

-1.46%

-1.66%

Northeast

97.79

-0.58%

+0.34%

-1.48%

-1.76%

*A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions.

Metropolitan

Areas

HPPI

August 2017

Appraiser Value vs. Homeowner Perception of Value*

HPPI

August 2017

Appraiser Value vs. Homeowner Perception of Value*

HPPI

August 2016

Appraiser Value vs. Homeowner Perception of Value*

Dallas, TX

+2.90%

+2.83%

+2.01%

Denver, CO

+2.66%

+2.60%

+3.09%

Seattle, WA

+2.17%

+2.00%

+1.00%

San Jose, CA

+1.55%

+1.37%

+2.33%

San Francisco, CA

+1.36%

+1.37%

+2.48%

Portland, OR

+1.34%

+1.14%

+1.71%

Charlotte, NC

+1.08%

+0.82%

-0.52%

Boston, MA

+0.89%

+0.68%

+0.59%

Los Angeles, CA

+0.86%

+1.02%

+1.35%

San Diego, CA

+0.76%

+0.78%

+0.52%

Sacramento, CA

+0.61%

+0.42%

+1.06%

Miami, FL

+0.57%

+0.41%

-0.14%

Phoenix, AZ

+0.36%

+0.16%

-0.73%

Minneapolis, MN

+0.32%

+0.36%

+0.15%

Kansas City, MO

+0.29%

+0.35%

-0.87%

Riverside, CA

+0.08%

-0.02%

+0.34%

Las Vegas, NV

+0.07%

-0.12%

-0.87%

Houston, TX

-0.05%

-0.06%

+1.08%

Detroit, MI

-0.37%

-0.59%

-3.03%

Tampa, FL

-0.51%

-0.80%

-1.60%

Washington, D.C.

-0.83%

-1.08%

-0.23%

Atlanta, GA

-0.93%

-1.03%

-0.85%

New York, NY

-1.46%

-1.69%

-1.57%

Cleveland, OH

-2.33%

-2.63%

-1.92%

Chicago, IL

-2.36%

-2.65%

-2.27%

Baltimore, MD

-2.82%

-3.04%

-3.03%

Philadelphia, PA

-3.05%

-3.04%

-3.24%

*A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions.

About the HPPI & HVI

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 a refinance mortgage application to the appraisal that is performed later in the mortgage process. This is an unprecedented report that gives a never-before-seen analysis of 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 is focused on appraisals, one of the most important pieces of information to the mortgage process.

The HPPI and HVI are released on the second Tuesday of every month. Both of the reports are created with Quicken Loans’ propriety mortgage data from 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. All indexes, along with downloadable tables and graphs can be found at QuickenLoans.com/Indexes.

About Quicken Loans

Detroit-based Quicken Loans Inc. is the nation’s second largest retail home mortgage lender. The company closed more than $300 billion of mortgage volume across all 50 states between 2013 and 2016. Quicken Loans moved its headquarters to downtown Detroit in 2010, and now more than 17,000 team members from Quicken Loans and its Family of Companies work in the city’s urban core. The company generates loan production from web centers located in DetroitCleveland and Scottsdale, Arizona. The company also operates a centralized loan processing facility in Detroit, as well as its San Diego-based One Reverse Mortgage unit. Quicken Loans ranked “Highest in Customer Satisfaction for Primary Mortgage Origination” in the United States by J.D. Power for the past seven consecutive years, 2010 – 2017, and highest in customer satisfaction among all mortgage servicers the past four years, 2014 – 2017.

Quicken Loans was ranked #10 on FORTUNE magazine’s annual “100 Best Companies to Work For” list in 2017, and has been among the top-30 companies for the past 14 consecutive years. The company has been recognized as one of Computerworld magazine’s ‘100 Best Places to Work in IT’ the past 13 years, ranking #1 for eight of the past twelve years including 2017. The company is a wholly-owned subsidiary of Rock Holdings, Inc., the parent company of several FinTech and related businesses. Quicken Loans is also the flagship business of Dan Gilbert’s Family of Companies comprising nearly 100 affiliated businesses spanning multiple industries. For more information and company news visit QuickenLoans.com/press-room.

 

SOURCE Quicken Loans

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