Detroit-based Quicken Loans, the nation’s second largest retail mortgage lender, this week reported its Home Price Perception Index (HPPI) narrowed in January, showing that appraisers’ opinions of home values were only 0.18 percent higher than homeowners’ estimates, according to the index’s national composite. This marks the closest the two opinions have been since September 2013.
In addition to the value perception gap closing, home values are on the rise. Following a slight decrease of home values in December from the month prior, the Quicken Loans Home Value Index (HVI) made positive movement in January, increasing 1.94 percent according to the national composite. Home values also increased 5.63 percent in January compared to the previous year.
Home Price Perception Index (HPPI)
The Quicken Loans HPPI, which evaluates perceptions of the housing market, reports that appraisers’ opinions of home values were 0.18 percent higher than homeowner opinions. This gap has narrowed since the previous month, when the difference was 1.43 percent. The two value opinions are also closer than the previous year when appraiser opinions were 2.11 percent higher than homeowner estimates.
“Interest rates have dropped and we have seen more and more Americans refinance their mortgage. These consumers have been watching their local housing market and realizing their home’s true value more accurately than any time in the last year and a half,” explained Quicken Loans Chief Economist, Bob Walters. “This is encouraging, but I urge homeowners to continue to watch the ebbs and flows of the market, especially in their neighborhood, so they understand the direction of home values in their community when it comes time to sell.”
Appraiser and homeowner opinions on value narrowed in metro areas as well. The gap contracted in more than 66 percent of the metro areas examined. Despite the trend toward agreement in value, appraisers in more than 74 percent of the metro areas evaluated continue to experience higher opinions of home values than the homeowners. This means that homeowners could still have more equity in their home than they realize.
Home Value Index (HVI)
Home values have reversed December’s course and increased 1.94 percent in January according to the Quicken Loans Home Value Index (HVI) national composite. On a yearly basis, home values are up 5.63 percent since January 2014. Every region measured by the HVI saw home value gains. The largest increase came from the Midwest with monthly growth of 2.62 percent and a 9.31 percent annual home value increase.
“The rebound from December’s dip in home values shows that the economy is slowly regaining its health and finding solid footing,” Walters continued. “Homeowners are becoming more confident in the housing market and the economy as a whole. All eyes will be on home inventory in the spring and summer to see if the added equity will push more homeowners off the fence and provide the impetus to put their home on the market.”
About the HPPI & HVI
The Quicken Loans HPPI represents the difference between appraisers’ and homeowners’ opinions of home values. The index compares the estimate that the homeowner supplies on the mortgage application to the appraisal that is performed later in the mortgage process. This is an unprecedented report that gives a never-before-seen analysis of how homeowners are viewing the housing market. The Quicken Loans HVI is a view of home value trends based solely on appraisal data from home purchases and mortgage refinances. This produces a wide data set and is focused on appraisals, one of the most important pieces of information to the mortgage process.
Both of these reports are created with Quicken Loans’ propriety mortgage data from the 50-state lenders’ mortgage activity across all 3,000+ counties. The indexes are examined nationally, in four geographic regions and the HPPI is reported for 27 major metropolitan areas.
For more information, all indexes, along with downloadable tables and graphs, visit http://www.quickenloans.com/press-room/2015/quicken-loans-study-shows-appraiser-and-homeowner-opinions-in-january-nearly-equal/.