Owner perceptions of home value improve for third straight month

Homeowners' expectations of their property's value continued to be closely in tune with the figure determined by an appraiser, according to the retail mortgage lender Quicken Loans.

In the latest update of its Home Price Perception Index, Quicken Loans found that the average appraisal in July fell 0.63 percent lower than an owner's estimate. This was the third consecutive month where the gap between appraised and estimated values narrowed, an improvement from 0.71 percent in June but a wider separation than the 0.28 percent figure recorded in July 2018.

"As expected, with mortgage rates at three-year lows and the refinance share of mortgage activity continuing to hover about 50 percent, homeowners are increasingly aware of the true value of their home," said Bill Banfield, executive vice president of capital markets at Quicken Loans. "Prices continue to increase in most areas but the rapid growth of years past has moderated, giving homeowners a better sense of their home's market value."

The gap between appraised and expected values was greatest in the Midwest and Northeast, with the average appraisal falling 0.69 percent short of expectations in the former region and 0.67 percent lower in the latter. The average appraisal was 0.63 percent less than expected in the South and 0.52 percent lower in the West.

In the 27 major metropolitan areas included in Quicken Loans' analysis, appraisals were greater than expected in 11 cities and less than expected in 16. Homeowners were most likely to be pleasantly surprised in Charlotte, N.C., where the typical appraisal was 1.92 percent higher than expected. Typical appraisals were 1.29 percent above estimates in Minneapolis and 0.9 percent higher in Boston. On the other end of the spectrum, the typical appraisal was 1.66 percent lower than expected in Chicago, 1.49 percent lower in Philadelphia, and 1.28 percent lower in Miami.

Quicken Loans also issues monthly updates to its Home Value Index, where a figure of 100 indicates that values are equal to those in January 2005. The national index stood at 114.02 in July, up 0.6 percent from the previous month and 4.78 percent from the previous year.

"The fact that July had the highest Quicken Loans Home Value Index since January 2007 has to be encouraging, especially to those who were deeply underwater during the worst of the recession," said Banfield. "The 1 percent drop in interest rates so far this year will help address affordability, but the strength of the economy and a lack of new homes being built will also play a big role."

Value growth in the Northeast was up 1.34 percent from June and 5.1 percent from July 2018, with the region's index reaching 106.25. In the Midwest, the index of 94.95 marked a 1.06 percent increase from the previous month and 5.45 percent increase from the previous year.

The South had an index of 114.53, creeping up 0.04 percent from June with annual growth of 3.51 percent. The index of 139.17 in the West marked a 0.22 percent increase from June and 4.22 percent increase from July 2018.

Quicken Loans bases its Home Price Perception Index on a nationwide database of refinance mortgages, where a homeowner estimates the value of their home and an appraiser determines a value later in the process. The Home Value Index is based on both refinance and purchase mortgage data.

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