The recent Home Value Index (HVI) showed that home prices dipped slightly in the southern states, running contrary to the general overall increase in home values throughout the U.S.
While not a cause for alarm, it is only a sign that prices are beginning to settle, says Quicken Loans Chief Economist Bob Walters.
“Home prices seem to be a bit frozen for the time being – validating that we are in a market that is well into the stabilization cycle,” said Walters. “The real test for home price solidity will be when inventory increases to a level of equilibrium between supply and demand.”
Pricing gains are still fastest in the West where home values are up 7.63% year on year; the South comes second with a 3.22% gain; the Northeast and Midwest are at 1.40% and 1.35% on an annual basis.
June is the fifth straight month that appraiser property value opinions have been below those of homeowners. Furthermore, if you’re looking for harmony between homeowner and appraiser opinions, says Walters, the trend is not your friend as the opinion gap has grown wider each month, with the difference of opinion coming in at 1.4% for June.
Walters said that much of the price confusion on the part of homeowners is likely due to the fact that price growth is slowing.
“Over the last five months we’ve seen homeowners continually value their homes higher than appraisers,” said Walters. “While each local market has a different story to tell, a large part of this perception gap is likely due to the normalization of home prices. After about a year of home values trending upward, it takes some time for many homeowners to realize home values are stabilizing in their neighborhoods.”
The West is a particularly noteworthy region as homeowner estimates exactly matched appraiser value opinions. This was offset by the Midwest, where homeowners rated their homes 2.14% more valuable than appraisers did. The same trend was seen in the South and Northeast with gaps of 0.24% and 0.27%, respectively.
Will the South rise again? Certainly home values throughout the rest of the nation are climbing.