Several indices compiled by Quicken Loans point to a national housing market that is well into the stabilization cycle.
The firm’s Home Price Perception Index — which compares the estimates homeowners supply on mortgage applications to the actual appraised value — fell by 1.4 percent in June. This indicates that the gap between appraised value and homeowner-perceived value is widening, something that has occurred for five straight months.
“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,” said Bob Walters, chief economist for Quicken Loans. “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.”
Markets where the gap between appraised value and perceived value widened the most in June included Kansas City, which saw a 3.19 percent expansion. Philadelphia and Charlotte followed with declines of 2.83 percent and 2 percent. Chicago, Cleveland, New York, Atlanta and Baltimore saw gaps widen by 0.87 percent to 1.45 percent.
In contrast, some markets in California, Texas and Colorado are in a situation where appraised home values are coming in higher than homeowners’ estimates.
Top markets where this is occurring include San Jose, San Francisco, Denver, Houston, Dallas and Los Angeles. Boston, Sacramento, Riverside (California), Las Vegas, Seattle and Washington, D.C., represent other improving markets.
Via its Home Value Index, Quicken Loans reported that national home values increased by 0.74 percent in June when compared to May. Year over year, overall values have risen by 4.38 percent.
During that 12-month period, the West has seen a 7.63 rise in values, followed by the South (3.22 percent), Northeast (1.4 percent) and Midwest (1.35 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,” Walters said. “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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