Homeowners and appraisers more eye-to-eye on values as prices grow
Appraiser and homeowner estimates of house prices are aligning closer after the second straight month of a tightened gap in perceptions of value, according to Quicken Loans. Prior to May, estimations grew farther apart for six consecutive months.
For June, the average home appraisal came in 0.71% below a homeowner's estimate of their property's worth. This is the second consecutive month where the gap narrowed. In May the gap was 0.79%, while in April it peaked at 0.87%, capping off six months where it had widened.
"The refinance share of mortgage activity is at its highest rate since January 2018, and it appears that homeowners have done their due diligence on their home's value as millions across the country refinance their home loans," Bill Banfield, Quicken Loans executive vice president of capital markets, said in a press release.
"This decline in the discrepancy between perceived and appraised value should encourage homeowners who are contemplating a refinance, knowing that appraisals are not likely to disrupt the process when they take advantage of low rates."
The typical home appraised 0.56% higher in June than the prior month, and the average home gained 4.78% in value from the same period a year ago. The increase in appraised valuations was due in large part to house prices gaining traction in the West, where they leaped 1.87% in a month — higher than any other region. For comparison, values in the Midwest and South posted monthly declines, though both decreases were less than 0.25%. Prices in the Northeast grew 1% month-over-month.
"I'm encouraged that the only regional declines in monthly appraisal values were less than a quarter percent, while the increases were both by at least 1%," Banfield said. "Additionally, the annual increase in home values continues to grow, showing that homeowners are much better off than they were a year ago as their homes continue to build value."