MReport August 2018

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54 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Appraisal Values vs. Homeowner Perceptions Appraisal values are about one-third of a percent lower than homeowners' expectations of their homes' values, and in some markets, they're even higher than homeowners expect. H omeowners' perceptions of their homes' values are falling closely in line with appraised values, according to the Quicken Loans National Home Price Perception Index. In fact, in many major metros, appraisal values are actu- ally coming in slightly higher than homeowner estimates. Appraised values were just 0.34 percent lower than homeowners across the nation expected in May, which according to the report is a "vast improvement" from a year ago when the gap was five times wider. In three-quarters of the 27 met- ros examined in Quicken's index, appraisal values were higher than homeowners' expectations. In five metros, appraisal values were more than 2 percent higher than homeowner perceptions of their home's value: San Jose, California; Boston, Massachusetts; Dallas, Texas; Denver, Colorado; and San Francisco, California. In fact, San Jose's appraiser values were close to 3 percent higher than homeowner perceptions of value. In all four major regions of the country, the gap between appraisal values and homeowner perceptions was less than 1 per- cent. This is in contrast to a year ago when the smallest gap was 1.63 percent, which was recorded in the West. Again this May, the gap be- tween appraiser values and home- owner perceptions was smallest in the West, where appraiser values were just 0.13 percent lower than homeowner perceptions. The gap was widest in the Northeast, where appraisal values were 0.49 percent lower than homeowners expected. The Quicken Home Value Index rose 0.71 percent over the month and 6.56 percent over the year in May, which Quicken called "healthy growth" for the 12-month period ending in May. Quicken's Home Value Index measures home values based on appraisal data across the nation. Appraisal values rose in three of four regions in May, falling only in the West, where they decreased 1.41 percent from April to May. The greatest increase in ap- praisal values took place in the Northeast, where values rose 4.33 percent over the month. Appraisal home values rose 1.05 percent in the South and 1.09 percent in the Midwest over the month of May. Home values rose in every region over the year in May with the Northeast leading the charge with an 8.42 percent increase and the West trailing with a 6.30 percent increase. The South and Midwest fell between with increases of 6.42 percent and 5.91 percent, respec- tively. This year's home buying season will be challenged by inventory shortages as "the number of eager buyers continued to outpace the number of homes that were avail- able, which has led to surges in appraisal values across the country and especially in the Northeast," said Bill Banfield, EVP of Capital Markets at Quicken Loans. Consumers Increasingly Uncertain Over Home Prices Consumers are more uncertain about home prices now than last year and are less confident about their upcoming ability to make debt payments. C onsumer uncertainty regarding home price growth is on the rise ac- cording to the Survey of Consumer Expectations (SCE) by the Federal Reserve Bank of New York. The survey found that while median home price change expecta- tions remained flat at 3.7 percent in May, uncertainty over home price growth rose to its highest level since May 2017. Despite being stable for the month, home price change expectations were also well above their 12-month average of 3.3 percent. The monthly SCE survey contains information about how consumers expect overall inflation and prices for food, gas, housing, and education to behave while providing insights into Americans' views about job prospects and earnings growth and their expec- tations about future spending and access to credit. In May, the SCE found that the perceived change in credit availability had improved from a year ago with the proportion of respondents reporting easier credit access increasing to 23.9 percent in May from 22.1 percent during the same period last year. However, consumers expected credit avail- ability to worsen in the second half of 2018, with the "proportion expecting tightening credit access increasing slightly from 29.1 per- cent last year to 30.4 percent," the survey indicated. Consumers also expected a change in tax structure with the median expectation on this indica- tor for the year ahead rising to 2.2 percent, "its third consecutive increase since reaching a series low of 1.5 percent in February 2018." Income growth during the year isn't something that consumers are expecting either. The survey found that consumer expectation on median one-year-ahead earnings growth slipped on a month-over- month basis from 2.7 percent in April to 2.5 percent in May 2018. Consumer negativity on income growth was also reflected in the expectation of their ability to pay. The SCE indicated that the average perceived probability of consumers missing a minimum debt pay- ment over the next three months increased slightly from 11 percent in April to 11.7 percent in May. The year-ahead expectation on the situation of household finances also worsened, according to the SCE, which found that 13.7 percent of consumers expected to be worse off financially compared with 11.8 percent who felt that way in April.

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