The real estate market is a cyclical one, and this June 9th article (below) from Quicken Loans is a reminder that we’re in an upswing, and with that, appraisals can often come in lower that the contracted price between buyers and sellers. This is because, while the sellers may be looking at the current market and the competition on the market at the moment, or the buyers may be looking at the upcoming value – “We need to buy now, because interest rates and prices are going up” – Appraisers will look to the past. They need to be able to justify their appraised value, to the bank, based on the recent sales.
What’s important to remember? Sellers, price accurately, and then watch the market closely and be ready to make adjustments quickly if necessary. Questions? Give me a call today, 443-676-1625.
Homeowner, Appraiser Home Value Opinion Gap Continues to Widen
– Home values post minor monthly, hearty annual, increases –
- This marks the first time in nearly two years appraiser opinions fell below homeowner estimates by 1% nationally.
- The majority of metro areas still show appraiser opinions higher than those of homeowners.
- Home values continue to display small monthly and moderate yearly increases.
Detroit-based Quicken Loans, the nation’s second largest retail mortgage lender, today reported the difference between appraiser and homeowner perceptions continued to increase for the fourth consecutive month in May. Appraiser opinions of home values were 1.15 percent lower than homeowner estimates, according to Quicken Loans’ national Home Price Perception Index (HPPI). This is the first time in 22 months appraisal opinions were lower than homeowner estimates by at least 1 percent.
Home values continued to steadily climb nationally, and in many regions of the country. The national Home Value Index (HVI) increased 0.24 percent in May from its April level, and rose 4.64 percent since the previous May.
Home Price Perception Index (HPPI)
Quicken Loans’ exclusive look at the gap between the perceptions of appraisers and homeowners showed the difference of home value opinion continued to widen on a national level. Appraiser opinions of home values were 1.15 percent lower than homeowner estimates according to May’s national index. This is a larger gap than in April, when the national index showed appraiser opinions 0.69 percent lower than homeowner estimates. Despite the widening perception gap at the national level, appraiser opinions remain higher in the majority of the metro areas examined.
“The HPPI, more than anything, is a reminder that there is no such thing as a national housing market,” said Quicken Loans Chief Economist Bob Walters. “Every city, and every neighborhood, moves in different directions based on local factors. Consumers need to remember to watch their local area closely to understand the direction their market is heading.”
Home Value Index (HVI)
Home values were slightly higher in May according to the Quicken Loans HVI, posting a 0.24 percent increase in the national index when compared to the month prior. Annual growth remains strong, showing a 4.64 percent increase. This same theme played out in the majority of the country, with exceptions in the Northeast, which only demonstrated a 0.90 percent annual increase.
“While smaller monthly increases and a slowing of the annual growth may sound discouraging, it is precisely the measured, healthy growth that is needed to embolden homebuyers and create a sustainable housing market,” explained Walters. “A more balanced market between buyers and sellers almost always leads to continued steady home value increases.”