For the second consecutive month, the gap between homeowner estimates and appraiser opinions has widened. Quicken Loans’ National Home Price Perception Index (HPPI) showed the average appraisal value was 1.47 percent below what owners expected in January. This two-month drop in the HPPI comes on the heels of a six month stretch where opinions between homeowner and appraiser were steadily moving closer to equilibrium.
Appraisal values in January stayed mostly flat, slipping only 0.34 percent last month according to Quicken Loans’ Home Value Index (HVI). When viewed annually, appraised values continue to rise, increasing 3.93 percent year-over-year.
According to the National HPPI, the value homeowners estimated at the beginning of the refinance process was an average of 1.47 percent lower than the value assigned by appraisers. Even though the composite value dropped, there continues to be variation across the country. Home appraisals in many of the western cities are outpacing owner expectations. In Denver, for example, appraised values were 2.98 percent higher than homeowners expected. Conversely, estimates from those in some of the eastern cites were higher than appraised values. This included Philadelphia, where appraisals were 2.94 percent lower than homeowners estimated.
“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.”
Home values have leveled off as the winter months carry forward. According to the National HVI, the average appraisal dipped a modest 0.34 percent from December to January. From an annual perspective, home values have risen 3.93 percent. Regionally, appraised values in the Northeast dropped the most month-to-month, but the main storyline continues to be robust annual growth in the West, while the Midwest lags behind.
“Tight inventory has been a key contributing factor to the year-over-year growth in home values,” said Walters. “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.”
My personal opinion is that appraisals in Toledo are lagging. Even with very tight inventories, now less than 6 months, I don't see any commentary or thought about future value. They do contain however, commentary about and use them in some or more valuations, distressed sales as comparables and rely on value of as much as a year earlier. This affects the middle to lower end of the Toledo market than it does the higher end obviously, but in Toledo, this is the market!