This article was originally posted on the Quicken Loans Press Room. For more articles and market updates visit their website www.quickenloans.com.
– Home values post slight increase for third straight month –
- June marks the fifth consecutive month that homeowners valued their properties higher than appraisers.
- Home values in the South region slipped slightly; all other regions continue to see slight gains.
DETROIT, July 14, 2015 – Detroit-based Quicken Loans, the nation’s second largest retail mortgage lender, today reported that appraiser home value opinions fell further below homeowner estimates in June. This is the fifth consecutive month of this trend at the national level. Appraiser opinions of home values were 1.4 percent lower than homeowner estimates, according to Quicken Loans’ monthly national Home Price Perception Index (HPPI).
Quicken Loans’ national Home Value Index (HVI) reported a slight increase of 0.74 percent in June, with home values increasing in all regions of the country except for the South, which posted a decline of 0.09 percent. National home values are up 4.38 percent from the year prior.
Home Price Perception Index (HPPI)
June marks the fifth consecutive month appraisers have assigned home values below homeowner estimates. During this five-month period, the gap between homeowner and appraiser estimates has increased each month, with an average 1.4 percent difference in June.
“Over the last five months we’ve seen homeowners continually value their homes higher than appraisers,” said Bob Walters, Quicken Loans Chief Economist. “While each local market has a different story to tell, a large part of this perception gap is likely due to the normalization of home prices. After about a year of home values trending upward, it takes some time for many homeowners to realize home values are stabilizing in their neighborhoods.”
Home Value Index (HVI)
Home values inched higher in June, increasing 0.74 percent from the month prior. Yearly growth has slowed slightly from the annual level of the previous month, but still posted a 4.38 percent annual increase. The South was the only region to post a monthly decrease in home values, dropping by 0.09 percent.
“Home prices seem to be a bit frozen for the time being – validating that we are in a market that is well into the stabilization cycle,” said Walters. “The real test for home price solidity will be when inventory increases to a level of equilibrium between supply and demand.”
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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 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 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. All indexes, along with downloadable tables and graphs can be found at QuickenLoans.com/Indexes.
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Written by : Quicken Loans
Detroit-based Quicken Loans Inc. is the nation’s second largest retail home mortgage lender. The company closed $140 billion of mortgage volume across all 50 states in 2013-2014. 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 five consecutive years, 2010 – 2014, and highest in customer satisfaction among all mortgage servicers in 2014. Quicken Loans was named among the top-30 companies on FORTUNE magazine’s annual “100 Best Companies to Work For” list for the last 12 consecutive years, ranking No. 12 in 2015.
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Well, big surprise!! Many homeowners are using Zillow to find out what their home’s worth. Virtually none of the borrowers know anything about adjustments and feel that their neighbor’s house (650sf larger than theirs and recently updated) is the gauge for how much their home is worth. Granted, many appraisers out there are working for bottom feeder wages and their work has a tendency to show it. It could be that they are not doing the work to fine tune the appraised value. At $250/appraisal, they need to do 2 per day to make a decent wage and there just isn’t time to spend on quality.
OK and? Homeowners ALWAYS think their home is worth more than it is. And by 1.4%? That is minuscule so actually homeowners are doing better than ever…congrats to them. You would think the homeowners and/or others think homeowners are the ones who study and work in the real estate market on a daily basis wouldn’t you?
Well then Quicken, believe the homeowners and loan on their estimated value. Disregard the professionals who don’t look at “Zillow”, or other bogus AVM’s for value. I get “how reliable is Zillow?” all the time. I flat out tell the owners that I don’t use Zillow. Because like the assessor, and Realtors; Zillow uses the W.A.G. methodology for value. “W.A.G.” Wild A$$ Guess. Takes the two story, one story, the REO, the double wide, the yurt, and the upper end home in the neighborhood by sqft and….drum roll…. Wallah! Here’s your value!!
Sniffle sniffle appraisers don’t know what they are doing. They they’re valuating homes low…..
What in the world is going on in the appraisal profession? We are actually supposed to be concerned about what homeowners think about the value of their homes. I guess I shouldn’t be surprised since we are also expected to explain why we don’t accept everything stated in MLS as being the gospel truth. As a side issue, Mike Allen, do you really think that putting out 2 or 3 quality reports a day is not possible? I’ve been doing that very thing for over 46 years and I never shortchange anyone on quality regardless of the fee because I’m ethical. Yes, we are getting screwed by the AMC system(the lenders and the AMC’s should bear the additional cost created by the need for AMC’s and the appraiser should get the full appraisal fee paid by the borrower). Any appraiser who puts out a shoddy product because the fee isn’t high enough is unethical and should have their license revoked. It’s the same as putting out bad appraisals using the excuse that there wasn’t enough time to do the job right.
Simple explanation! Homeowners are getting their estimates from the likes of Zillow, which are the most unrealistic estimates available! And should I be concerned with this when our job is to protect public trust and the lenders interests?
On the flip side, it does disturb me that some would trust the WAG method (see jd’s comment below, kudos by the way) of value over a boots on the ground, eyeball in the home, appraisers method provided by an ethical appraiser who uses due diligence and properly supports their adjustments, opinion, and methodology in each of their reports.
And Russell, I would love to know how your putting out 3 quality appraisals a day.
I believe my report are first class reports and I do require full fee and more for increased scope of work! I used to get a report a day out, but with all the new regs and scope creep my reports are 40 plus pages now and I get one out every day and a half to every other day. Of course I do everything myself, including the running of the company. So what am I missing here?
If you count inspection, inspection & report take a day. But you can’t do them on the same day.
Appraiser’s opinions of real property value, known as appraisals, based on evidence, appraisal methodology, experience, training, education, ethics, laws, etc., are different from homeowner’s biased fantasy of value, known as biased fantasy of value, based on delusions of grandeur, rumor and baloney, differ? Oh, please, tell me it just ain’t so!
This is a new twist on an old argument as typically the articles focus on how real estate agents disagree with the appraised value. Telling me that a home owner, an agent, or a loan officer disagrees with my work/value, is just like telling me an alien disagrees with me. My client is the lender and the lender only, what other peoples opinions are is completely irrelevant. Quicken loans, instead of spending time and money on a worthless poll, why not push for education and training standards for the other parties involved to be raised to that of a certified appraiser. Why must we as appraisers always be the educators and inform less qualified people on how things work. I may work with the listing agent, the buyers agent, a loan officer, the home owner, the buyer, the AMC staff, an underwriter, have my work compared to several lender AVM’s, and the governments CU platform, but no one is this process will hold an equivalent license to me.
Another BS article from Appraisal Buzz. Homeowner’s values are based on emotion but no facts, Appraiser’s value is based on facts and no emotion.