couple with appraiser showing them something in their house

Home Values Rise As Spring Comes

Kevin Graham3-Minute Read
April 13, 2021

In the month of March, data from Rocket Companies® showed that home values were up a whopping 1.33% overall. And although homeowners and appraisers were further apart in terms of their estimations of home values, it was because home values were generally coming in higher than where homeowners expected.

If you’re looking to apply, rates that are still very low make it advantageous to get a mortgage right now.

Home Price Perception Index (HPPI)

Difference Between Homeowner Estimates and Appraiser Opinions of Home Values

Appraised values came in 1.04% higher than homeowners were anticipating in March. This is an increase of 0.05% compared to where it was in February at 0.99% above homeowner expectation.

Across all regions there was moderate movement in the direction of higher appraised values relative to homeowner expectation. In the South, the difference was 1.05%. In the West, appraisals came in 1.04% above homeowner estimates. In the Northeast and Midwest, appraisals came in 1.03% higher than homeowners hypothesized.

Perception of Home Values Across America

In 26 of 27 Metro areas looked at, home values were above homeowner estimates. Properties were most undervalued by their owners in Charlotte, North Carolina. The aggregate property value here came in 1.73% higher than estimates. The only city where values are lower than homeowners expect is Chicago, with a difference of 0.11%.

Rocket Mortgage® Executive Vice President of Capital Markets Bill Banfield says this was a positive development for homeowners looking to refinance.

“Whether you’re looking to use the additional equity for better mortgage terms, consolidating debt or home improvements, you want your mortgage to close without any surprises,” Banfield says. “If values are generally coming in higher than expected, there’s less chance of needing to restructure the transaction to accomplish your goals.”

Home Value Index (HVI)

March tends to be the time of year where the weather gets good enough across most of the country that home buying season can really heat up. We can see this in the data as home values were up 1.33% in March and have risen 9.29% on the year.

On a regional basis, only homes in the Midwest suffered a small drop in property values last month, falling 0.04% and still up 7.29% on the year. In the West, values were up 1.55% and 9.87% since last March.

Meanwhile, homeowners in the Northeast saw values rise 1.62% and 9.92% over the course of the year. Finally, the South saw the biggest uptick in values over the course of the month as they rose 2.49% and have gone up 8.7% over the last 12 months.

In the eyes of Banfield, rising home values are a good thing for those looking to refinance. If you want to purchase, you’ll need to make sure your offers are solid.

“Rising home values mean increased equity, which makes refinancing easier, regardless of your goals,” he says. “For those looking to buy, it’s definitely a seller’s market in much of the country and competition will be high. Given this, you’ll want to get a preapproval backed by documentation so that sellers know you’re good for the financing.”

Methodology

Both the HPPI and the HVI are derived from appraised values in one way or another, but let’s briefly run you through how we come to our numbers.

Let’s start with HPPI. When someone inquires about refinancing with us, we ask for an estimated home value. This gives us a basis to determine whether a client can accomplish their goals by refinancing. Every home is later given an official valuation, usually in the form of an appraisal. We can plug these numbers into a formula:

(Homeowner Estimate - Appraised Value)

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Appraised Value

Homeowner estimates and appraised values are aggregated nationally, regionally and across each of the 27 metro areas we look at in putting together this report.

The HVI is based on a mathematical model that takes into account characteristics including when a home was built, the date of its last appraisal, the square footage and acreage, among others. The values are again aggregated to come up with national, regional and select local data.

If you like what you see and you’re ready to move forward with an application, get started online with our friends at Rocket Mortgage® or call them at (833) 326-6020.

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    Kevin Graham

    Kevin Graham is a Senior Blog Writer for Rocket Companies. He specializes in economics, mortgage qualification and personal finance topics. As someone with cerebral palsy spastic quadriplegia that requires the use of a wheelchair, he also takes on articles around modifying your home for physical challenges and smart home tech. Kevin has a BA in Journalism from Oakland University. Prior to joining Rocket Mortgage he freelanced for various newspapers in the Metro Detroit area.