Quicken: Owner Perceptions of Home Values Improve After Six Months of Declines

MBA NewsLink Staff

June 14, 2019

Quicken Loans, Detroit, said the average home appraisal in May came in 0.79% lower than what the owner estimated, the first improvement following six months of growing gaps between the two data points.

The Quicken Loans Home Price Perceptions Index is slightly smaller than in April. Quicken Loans Executive Vice President of Capital Markets Bill Banfield said while a lower than expected appraisal is never welcome news, this difference between homeowner estimates and appraisal values is slightly smaller in April.

"An appraisal can cause a variety of emotions from curiosity of the value, to frustration if it comes in too low and even surprise if the appraised value shows more equity than the homeowner realized," Banfield said. "Luckily there wasn't a lot of frustrated homeowners in May since the HPPI values across the country are in a relatively tight band, showing that appraisals are not likely to cause much of a disruption in the mortgage process."

Quicken said none of the metro areas studied had appraised values 2% lower than what owners were expecting. In May, Philadelphia trailed all other cities, with the average appraisal 1.74% lower than what the owner estimated. Charlotte boasted an average appraisal value 1.99% higher than expected.

The Quicken Loans' Home Value Index showed appraisal values reversed course from April's large increase. The nation's average home appraisal was 1.10% lower than in April, nearly erasing last month's growth. The annual measure, on the other hand, continued its positive momentum, with home values rising 3.54% year-over-year at a national level.

The report said the bulk of the national drop in appraisal values came from the West, where home values were 1.74% lower in May than in April. The Midwest, with a month-over-month increase of 0.47%, is the only region with home value growth. All regions continued annual appraisal value increase, ranging from 0.07% bump in the Northeast to a 4.68% year-over-year jump in the Midwest.

"Winter's long hibernation is definitely over for Midwest homebuyers," Banfield said. "They're hitting the streets and competing for a persistently low home inventory which is leading to appraisal value spikes. The annual increase is a very positive sign, showing the growth is more than just seasonality."

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