The difference between homeowner estimates and appraisal values narrowed for the first time in six months.
The Quicken Loans Home Price Perceptions Index (HPPI) showed that the average home appraisal was 0.79% lower than what homeowners were expecting.
However, the gap slightly shrank in May, as none of the metro areas studied had appraised values 2% lower than what owners believed their home is worth. Charlotte’s appraisal value averaged 1.99% higher than anticipated. Meanwhile, people in Philadelphia overestimated the value of their homes, with the average appraisal 1.74% lower than what they thought.
"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,” said Bill Banfield, executive vice president of capital markets at Quicken Loans. "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. This is, however, a reminder to homeowners that they should always keep an eye on the home sales around them to get a realistic gauge of their home value before estimating what it could be."
Appraisal values dipped 1.10% from April to May, according to Quicken Loans’ National Home Value Index (HVI). However, home values climbed 3.54% year-over-year across the US, continuing its positive momentum.
“The annual increase is a very positive sign, showing the growth is more than just seasonality,” Banfield said.