Appraisers are placing significantly higher values on homes in August, but it seems it is still not enough for homeowners, who are still overestimating their home’s value, according to a report from Quicken Loans, a retail mortgage lender.
The Quicken Loans Home Value Index, which measures home value change exclusively through appraisals, increased in August. The home prices increased 1.73% from July, and 8.13% from August 2015.
Surprisingly, however, the West fell behind, with just a 0.74% increase in home prices, while the Midwest posted growth of 2.45%, according to the report.
Just one month after posting a nearly four-year high, home sales in California took a step backwards in the month of July, with year-to-date sales falling from previous year for first time in 18 months, according to a new report from the California Association of Realtors.
“Competition in the housing market has been especially hot this summer, causing home values to climb,” Quicken Loans Chief Economist Bob Walters said. “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,” Walters said.
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(Source: Quicken Loans)
Despite this increase, however, homeowners still think their home is worth more than it actually is. In August, appraisals fell 1.56% below homeowner’s expectations.
This is slightly better than last month, when appraisals fell 1.69% below a homeowner’s expectations.
“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,” Walters said.
“In some portions of the Midwest, where appraisals are averaging 2% to 3% 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,” he said.
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(Source: Quicken Loans)
