Quicken Loans, the nation's second largest retail mortgage lender, today reported average home appraisals in October were 1.98 percent lower than what homeowners expected marking the second consecutive month the spread has tightened. The perception gap was slightly larger in September, with appraised values 2 percent higher than what homeowners estimated.

Home values rose at an increased pace in October according to Quicken Loans' national Home Value Index. Average appraised values rose 1.07 percent in October, compared to near flat growth in September. The Northeast led the country in home value gains with a 1.94 percent increase, while growth in the West was slowest, with a 0.49 gain.  

Home Price Perception Index

The difference between what homeowners perceived their homes to be worth and what appraisers valued them narrowed in October, albeit slightly. Average appraised values in October were 1.98 percent lower than what homeowners estimated according to the national HPPI. This is the second month the gap between appraiser opinions and homeowner expectations narrowed, although October marks the ninth consecutive month owners overestimated their home's value.

"It's too early to call it a trend, but it is encouraging to see the gap between the estimates homeowners provide and the appraised values starting to narrow," said Quicken Loans Chief Economist Bob Walters. "The more homeowners are in line with appraisers, the easier it will be to refinance their mortgage and easier for those looking to buy a home. If the two are aligned, it eliminates one of the top stumbling blocks in the mortgage process."

Home Value Index

Home values climbed 1.07 percent in October according to Quicken Loans' national HVI, the only measure of home values based completely on appraisals. The increase comes after two months of practically flat home value changes. Values continue to raise annually as well, with a 4.01 percent gain compared to October 2014. All four regions measured saw increases. The Northeast had the highest home appreciation, with a 1.94 percent increase. The Midwest, South and West regions all had value growth of less than 1 percent.

"Home values continue to make steady, healthy, growth," said Walters. "Equity gains increase homeowner faith and enthusiasm in the housing market. There are still many Americans underwater, but with every bump in equity more homeowners who have been waiting to list their home are able to sell or more easily refinance – which takes pressure off of those homeowners and provides housing inventory for first time homebuyers." 

*A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions.

*A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions.

*A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions.