Home value perceptions improve in September

Homeowners were giving a more accurate assessment of their property's value in September, according to retail mortgage lender Quicken Loans' latest update of its Home Price Perception Index.

The average appraisal during the month fell 0.49 percent below a homeowner's estimate. This was an improvement from the 0.64 percent gap in August, though still up from a 0.29 percent difference in September 2018.

There was little difference in value perception among the different regions in the United States. The average appraisal was 0.45 percent less than expected in the West, 0.5 percent lower in the Northeast, and 0.51 percent lower in the Midwest and South.

Among the 27 major metropolitan areas included in the report, average homeowner estimates consistently fell within 2 percent of the appraised value and were within 1 percent in all but six cities. The average appraisal was 1.71 percent higher than expected in Boston, 1.61 percent higher in Charlotte, N.C., and 1.07 percent higher in Minneapolis. The average appraisal fell 1.67 percent short of expectations in Chicago, 1.37 percent lower in Philadelphia, and 1.27 percent lower in Cleveland.

"The HPPI is a reminder to have a good grasp on your area's unique housing market before you start the mortgage process, for either a home purchase or refinance," said Bill Banfield, executive vice president of capital markets at Quicken Loans. "Underestimating your home value could, understandably, feel like a windfall. But if a homeowner overestimates their home value, the mortgage could need to be reworked when refinancing – possibly even requiring the owner to bring more cash to the closing table."

Quicken Loans also updated its Home Value Index, where a figure of 100 is equal to values recorded in January 2005. September's index stood at 117.58, jumping 2.15 percent from the previous month and 6.52 percent from the previous year.

In the Northeast, the index of 107.49 was up 1.53 percent from August and 4.52 percent from September 2018. The strongest annual growth occurred in the Midwest, where the index rose 6.34 percent from the previous year and 1.52 percent from the previous month to 96.46.

The Home Value Index in the West stood at 143.75, up 2.93 percent from August and 5.51 percent from September 2018. In the South, the index crept up 0.26 percent from the previous month and rose 4.28 percent from the previous year to 116.08.

"Buyer interest, combined with persistently low home inventory, continues to drag up home values," said Banfield. "With August's jump in homebuilding, at its highest level in 12 years, there could be some hope on the horizon for home shoppers who haven't been able to find a home that is a perfect fit at the right price."

Quicken Loans bases its Home Price Perception Index on recent refinance mortgages, comparing homeowner estimates submitted during the process to values later determined by an appraiser. The Home Value Index derives from a database of both purchase and refinance mortgages.

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