The gap between the value homeowners expect to sell for and the figure calculated by appraisers was 1.9% in April according to the National Quicken Loans Home Price Perception Index. It’s the fifth straight month that the gap has widened and was up from 1.77% in March.
"The appraisal is one of the most important data points in a mortgage transaction. This single number can impact how much money a buyer needs to bring to closing, or the equity that is available to the homeowner on a refinance," said Quicken Loans Vice President of Capital Markets, Bill Banfield. "If homeowners have a grasp on home value differences throughout their local area, it can lead to a smoother mortgage process."
Sellers in the West appear to be closer to the appraised value while those in the Midwest and East are more likely to be overestimating the value of their homes.
Meanwhile, the mortgage lender’s Home Value Index, which is based solely on appraisals shows a 1.06% rise in national home values in April and a 5.08% rise year-over-year. The West saw the largest annual rise at 6.52% while the Northeast saw a more modest 3.54% growth.
"Home values were pushed higher once again by the demand for housing outpacing the stock of available homes. This effect is intensified by the start of the spring buying season," Banfield said. "While sellers are obviously thrilled as their investment continues to grow in value, this trend could make homebuyers set their sights on smaller homes or less pricey neighborhoods. I would encourage homeowners who are considering listing their home to take advantage of the opportunity they have in this sellers' market."
More market update:
Home sellers’ expectations of the value of their properties are often higher than the appraised value and the gap is getting worse.