Disparity narrows between perceived and actual home values
Homeowners estimate their homes are worth 1.7% more than appraisers do, according to Quicken Loans. This represents the first time that gap has narrowed in seven months.
In June, homeowner estimates were an average of 1.93% higher than appraisal values.
"While a 1% or 2% difference in home value opinions may not seem like a lot, it could be enough to derail a mortgage," said Bill Banfield, Quicken Loans executive vice president of capital markets, in a press release.
"A homeowner could be forced to bring more cash to closing in order to make a mortgage work if the appraisal is lower than expected. On the other hand, if an appraisal comes in higher, they could be surprised with more equity than they had planned. Either way, if owners are aware of their local markets it will lead to smoother mortgage transactions," he said.
Eastern and Midwestern regions maintained the national trend of a lower appraiser opinion while Western markets were most likely to undervalue their home.
U.S. home prices rose 1.25% in June, marking a 5.35% increase from the previous year. The Northeast was the only region where home values dropped from May to June, with a decline of 1.18%.
Overall, all regions showed an increase in home prices annually, scaling from 2.17% in the Northeast to 6.12% in the West.
"What's clear is that the demand for housing is strong in much of the country," said Banfield. "With interest rates remaining historically low, this could be the time for a homeowner to move on to the new construction home they had their eye on. If they do so, it would open home options for first time home buyers entering the market. The additional inventory could lead to more balanced prices, moving away from the spike in annual growth we have seen lately."