US Real Estate Report: Valuations

US Real Estate Report: Valuations

Quicken Loans, the nation’s second largest retail mortgage lender, today announced appraisals across the country were an average of 1.56 percent lower than what refinancing homeowners expected in August, according the company’s national Home Price Perception Index (HPPI).

The Quicken Loans Home Value Index (HVI), which measures home value changes exclusively through appraisals, moved higher yet in August. Home values increased 1.73 percent over the previous month, while jumping 8.13 percent higher than August 2015, according to the national HVI.

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406988

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Home Price Perception Index (HPPI)

The trend of owners overestimating their home’s value when refinancing continued in August, with appraisals falling 1.56 percent lower than owners’ expectations in the national HPPI. However, the gap between valuation opinions of appraisers and owners edged closer to equilibrium since last month when appraisals were 1.69 percent lower than expected. Despite the nationwide trend, appraised values were higher than owners’ estimates in nearly half of the metro areas examined by the study. The report varied nationally with some areas, including Minneapolis, showing nearly identical estimates and values; while many western cities reported higher appraisals, like Denver where home values were as much as 3 percent higher than expected.

“While a one and a half percent difference may not seem like a big disparity of home value opinions, the gap could cause problems, especially in areas with an even wider difference,” said Quicken Loans Chief Economist Bob Walters. “In some portions of the Midwest, where appraisals are averaging 2-3 percent less than what was expected, this will often lead to restructuring a refinance or the homeowner needing to bring a few more thousand dollars to the closing table.”

Home Value Index (HVI)

Home values continued the upward climb in the last full month of summer, as competition for available housing was fierce. Appraisals showed average home values increased 1.73 percent since July and grew 8.13 percent year-over year, according to the national HVI. In a reversal of the prevailing trend, the West trailed the other regions in home value growth with a 0.74 percent increase. The Midwest had the largest growth with a 2.45 percent month-over-month gain.

“Competition in the housing market has been especially hot this summer, causing home values to climb,” said Walters. “This spike can concern some buyers, as the increases are outpacing inflation and wage increases, leading to affordability problems in some of the hottest markets. However, the pace of home value increases will likely slow as we move into the colder months and there is more balance between buyers and sellers.”

 

HVI

August 2016

January 2005 = 100

HVI

August 2016

vs.

July 2016

% Change

HVI

August 2016

vs.

August 2015

% Change

HPPI

August 2016

Appraiser Value
vs. Homeowner
Perception of
Value*

HPPI

August 2015

Appraiser Value
vs. Homeowner
Perception of
Value*

National
Composite

101.31

+1.73%

+8.13%

-1.56%

-2.65%

*A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions.

 

Geographic

Regions

HVI

August 2016

January 2005 = 100

HVI

August 2016

vs.

July 2016

% Change

HVI

August 2016

vs.

August 2015

% Change

HPPI

August 2016

Appraiser Value
vs. Homeowner
Perception of
Value*

HPPI

August 2015

Appraiser Value
vs. Homeowner
Perception of
Value*

West

84.47

+0.74%

+6.55%

-1.50%

-2.04%

South

97.46

+1.57%

+6.26%

-1.65%

-2.30%

Midwest

101.55

+2.45%

+6.84%

-1.81%

-2.55%

Northeast

120.72

+1.13%

+3.85%

-1.87%

-2.50%

*A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions.

 

Metropolitan

Areas

HPPI

August 2016

Appraiser Value vs. Homeowner Perception of Value*

HPPI

July 2016

Appraiser Value vs. Homeowner Perception of Value*

HPPI

August 2015

Appraiser Value vs. Homeowner Perception of Value*

Denver, CO

+3.09%

+3.10%

+4.31%

San Francisco, CA

+2.48%

+2.36%

+5.00%

San Jose, CA

+2.33%

+2.52%

+5.83%

Dallas, TX

+2.01%

+2.16%

+2.68%

Portland, OR

+1.71%

+1.57%

+2.26%

Los Angeles, CA

+1.35%

+1.06%

+1.61%

Houston, TX

+1.08%

+1.18%

+3.10%

Sacramento, CA

+1.06%

+1.13%

+1.07%

Seattle, WA

+1.00%

+0.71%

+0.55%

Boston, MA

+0.59%

+0.43%

+1.74%

San Diego, CA

+0.52%

+0.35%

-0.05%

Riverside, CA

+0.34%

+0.51%

+1.20%

Minneapolis, MN

+0.15%

-0.18%

-0.01%

Miami, FL

-0.14%

-0.02%

+0.10%

Washington, D.C.

-0.23%

-0.27%

+0.45%

Charlotte, NC

-0.52%

-0.65%

-2.04%

Phoenix, AZ

-0.73%

-0.77%

-0.57%

Atlanta, GA

-0.85%

-1.12%

-0.89%

Kansas City, MO

-0.87%

-1.16%

-2.86%

Las Vegas, NV

-0.87%

-0.81%

+0.60%

New York, NY

-1.57%

-1.62%

-1.12%

Tampa, FL

-1.60%

-1.24%

-0.78%

Cleveland, OH

-1.92%

-2.04%

-1.35%

Chicago, IL

-2.27%

-2.37%

-2.39%

Baltimore, MD

-3.03%

-3.05%

-1.65%

Detroit, MI

-3.03%

-3.24%

-0.66%

Philadelphia, PA

-3.24%

-3.40%

-3.31%

*A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions.

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 a refinance 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 HPPI national composite is determined by analyzing appraisal and homeowner estimates throughout the entire country, including data points from both inside and outside the metro areas specifically called out in the above report.

The Quicken Loans HVI is the only 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.

The HPPI and HVI are released on the second Tuesday of every month. Both of the 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. All indexes, along with downloadable tables and graphs can be found at QuickenLoans.com/Indexes.

About Quicken Loans

Detroit-based Quicken Loans Inc. is the nation’s second largest retail home mortgage lender. The company closed more than $220 billion of mortgage volume across all 50 states since 2013. Quicken Loans generates loan production from web centers located in Detroit, Cleveland and Scottsdale, Arizona. The company also operates a centralized loan processing facility in Detroit, as well as its San Diego-based One Reverse Mortgage unit. Quicken Loans ranked “Highest in Customer Satisfaction for Primary Mortgage Origination” in the United States by J.D. Power for the past six consecutive years, 2010 – 2015, and highest in customer satisfaction among all mortgage servicers the past three years, 2014 – 2016.

Quicken Loans was ranked No. 5 on FORTUNE magazine’s annual “100 Best Companies to Work For” list in 2016, and has been among the top-30 companies for the last 13 years. It has been recognized as one of Computerworld magazine’s ‘100 Best Places to Work in IT’ the past 12 years, ranking No. 1 in 2016, 2015, 2014, 2013, 2007, 2006 and 2005. The company moved its headquarters to downtown Detroit in 2010, and now more than 10,000 of its 15,000 team members work in the city’s urban core. For more information about Quicken Loans, please visit QuickenLoans.com, on Twitter at @QLnews, and on Facebook at Facebook.com/QuickenLoans.

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Shayne Heffernan Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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