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Owner and appraiser opinions nearing alignment as home value growth slows

October marks the eighth-straight month with less than half a percent difference between appraisals and homeowner estimates. Quicken Loans Home Price Perception Index (HPPI) showed appraised values were and average of 0.28 percent lower than owners expected, at a national level.

While home owners are seeing eye-to-eye with appraisers, home value growth is starting to slip. Appraised values decreased 0.55 percent between September and October, but have risen 4.39 percent since October 2017. While this is still healthy annual growth, it is the lowest year-over-year increase in the last twelve months.

Home Price Perception Index (HPPI)

Quicken Loans’ HPPI, which compares appraisals to the estimated value homeowners provide at the beginning of the mortgage process, indicates a general understanding of home values nationally, with some variation across the country. The average homeowner expectation in October was 0.28 percent too high. This is a vast improvement over the last year, when there was nearly a 1 percent difference between the two data points. When viewed by the metro area, appraisals range from 2 percent lower than what the homeowners estimated in Chicago to nearly 3 percent higher than expected in Boston.

“With homeowner estimates and appraiser opinions moving more closely together, mortgages are less likely to run into snags in the process,” said Bill Banfield, Quicken Loans Executive Vice President of Capital Markets. “With the combination of a better understanding of appraisal values, and continued home value increases, this could be a good time for homeowners to tap into their growing equity to pay off higher interest debt or make home improvements.”

Home Value Index (HVI)

Appraised values, as measured by Quicken Loans’ HVI, continued to make gains over 2017 levels, despite a small monthly dip. Home values jumped 4.49 percent year-over-year, the smallest gain this year, but still outpacing inflation. The West posted the highest annual home value gain even though it showed the largest decline from September to October of this year. The home value growth in the Northeast is the most sluggish of all the regions, with just a 2.59 percent annual increase in appraised values and a 0.48 percent decline month-over-month.

“The pace of home price growth appears to be moderating and varies by region representing a healthy adjustment to strong price gains of the past,” Banfield said. “Slower gains in prices can balance out changes in interest rates affecting affordability for those looking to purchase a new home.”

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