Appraisal: The Shade to the Housing Markets Fire Home Values?
By: Devin Valdez
Finding an accurate value for a home is becoming a hard task to do for appraisers and homeowners, alike.
In the month of June, we saw the smallest gap between homeowner home value estimates and the home’s appraised value, at 1.7% of sellers overestimating their home’s value.
This is in part related to the increase in home values we have been steadily witnessing in 2017.
Due to the small supply for the huge demand of homes for sale and lack of new home construction, home values have risen in June by 1.25%, totaling a rise of 5.35% for the year, according to Quicken Loans.
As home values rise, we are seeing more and more of mortgage loans potentially fall. The cause of the destruct? – Low-Value Appraisals.
Appraisers are having a tough time keeping up with the rapid increase of home values because they can’t find comparable sales to properly give a home an accurate price.
“While a 1% or 2% difference in home value opinions may not seem like a lot, it could be enough to derail a mortgage,” said Quicken Loans Executive Vice President of Capital Markets, Bill Banfield. “A homeowner could be forced to bring more cash to closing to make a mortgage work if the appraisal is lower than expected.”
This issue is pricing out many first-time homebuyers, who are more than likely putting all their money into their down payment. The chances of them having a few thousand dollars extra to pay the difference of a low-value appraisal is slim.
It is predicted that the rest of 2017 will most likely see a continual rise in home values by up to 5%, and it is likely that more issues will ensue with appraisers pinpointing an appropriate value of a home based on comparables.
Experts say that that this low-value appraisal epidemic won’t fully diminish until home prices begin to flatten out.
If you’re looking to buy, now may be the right time before home values rise. If you are already a homeowner, now may be the best time to cash-in on your rising equity and refinance your home.
For more information on buying, selling or refinancing your home- please give one of our seasoned agents a call today! 510-537-1900
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