Gap between homeowner estimates and appraised value widens for second consecutive month

by Anna Sobrevinas16 Feb 2017
For the second month in a row, the gap between homeowners’ estimates of home values and appraised values has widened, according to a study by Quicken Loans. This reversal comes after a six-month period in which that gap was narrowing.

Quicken Loans’ national Home Price Perception Index recorded an average appraisal value 1.47% below homeowners’ expectations. The company’s Home Value Index showed appraised home values declined by 0.34% month over month in January. However, they were 3.93% higher than values in January of 2016.

The survey also noted a discrepancy between western and eastern cities– with appraised values in some western cities actually outpacing homeowner expectations. Appraised values in Denver, for example, were 2.98% higher than homeowner expectations, while in Philadelphia, appraised values were 2.94% lower than homeowner 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,” said Quicken Loans Chief Economist Bob Walters. “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.”

Appraised values in the Northeast saw the biggest month-to-month decline in January, while values in the West continue to be robust, showing strong annual growth.

“Tight inventory has been a key contributing factor to the year-over-year growth in home values,” Walters said. “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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