Appraisal Values Lag
For the second month in a row, homeowners found a gap between their estimates for their homes’ value and appraiser’s opinions. Numbers from Quicken Loans’ National Home Price Perception Index showed average appraisals were 1.47 percent lower than homeowner estimates in January.
Even though the overall values dropped, different regions of the country experienced variations. In western cities, many appraisals actually were higher than expected. For example, Denver appraisers valued homes 2.98 percent higher than homeowner estimates. Eastern cities, on the other hand, saw many homeowners overestimating their homes worth. In Philadelphia, appraisals were 2.94 percent below expectations.
“Having a good understanding of the conditions in their local housing market can be a valuable tool for consumers as they prepare for the home buying or mortgage process,” says Bob Walters, chief economist, Quicken Loans. “Accurate expectations at the onset of the mortgage process not only makes it smoother, but can prevent unexpected changes in the amount of funds to bring to the closing table if the appraised value comes in lower than initially estimated.”
While the gap between homeowner expectations and appraised value did widen, the appraisal values themselves stayed mostly flat in January, dropping only 0.34 percent from the previous month’s value. When viewed year-over-year, however, home appraisals continue to rise, and have increased 3.93 percent over the same time last year.
The same regional variations could be observed in the average appraisal values. Northeast values dropped the most month over month, while homes in the West saw larger growth. The Midwest sat in the middle.
“Tight inventory has been a key contributing factor to the year-over-year growth in home values,” Walters says. “This steady growth could very well lead to more availability, driving homeowners to consider cashing in on their growing equity by putting their home on the market. When this happens, it will open up new opportunities for eager buyers.”
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