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TH E M R EP O RT | 57 O R I G I NAT I O N S E R V I C I N G A NA LY T I C S S E C O N DA R Y M A R K E T ANALYTICS THE LATEST Homeowners, Appraisers Closer to Seeing Eye-to-Eye Valuations may reach equilibrium in the near future. H istory has shown that homeowners typically value their homes at a higher price point than appraisers, but as the housing market evolves, these opinions are inching closer to reaching a point of equilibrium. Quicken Loans' Home Price Perception Index (HPPI) found that homeowners valued their homes 1.75 percent more than ap - praisers in January 2016, marking a full year that this trend had continued. Last month, the gap between home values and ap - praisers was 1.80 percent. "Homeowners across America are understanding their home's worth more as the gap between homeowner estimates and appraiser opinions narrows," Quicken stated. The period between mid-2013 and 2015 was the only time since 2007 that appraisers have valued homes more than homeowners. This rare occasion ended at the start of 2015, and homeowner opinions continued to increase through mid-2015, until they re - versed directions and began head- ing toward an equilibrium point. January 2016 will mark the fifth month that the national HPPI has moved toward a point of equality among homeowners and apprais - ers, but according to Quicken, "homeowners and appraisers in many metro areas still do not see eye-to-eye." This rings true particularly in the Western region, where "homeowners are continu - ing to underestimate the value of their home as they struggle to keep up with rising home values." "It's always important to understand your local real estate market," said Bob Walters, chief economist at Quicken Loans. "If home values are growing in the area, homes may be gaining eq - uity faster than consumers realize. On the other hand, if the local market is struggling, the apprais- ers who are most aware of home value changes may recognize this before homeowners come to terms with reality." The HPPI gap continues to narrow, but home values declined in January 2016, according to Quicken Loans' National Home Value Index (HVI). Home values decreased 0.42 percent since December, although year-over- year growth continued with an increase of 3.37 percent. Western and Southern regions experienced modest gains, while the Northeast and Midwest showed small declines month-over-month and year-over-year. "Home valuations continue to rise as the economy strengthens and buyers find homeowner - ship often cheaper than renting," Walters explained. "The number of potential homebuyers outpaced sellers in some markets. On the other hand, some areas are more balanced, producing slower growth or even a slight decline in some months. It is important to remember that tepid growth is not a cause for concern, but rather a sign of a healthy and sustainable market." Is Bidding Back? More Homes Selling at List Price or Higher Looser credit, tight inventory, and fewer new home starts all play a role. S trong demand and thin inventory across housing markets is increasing competition among buyers and causing more homes to sell at asking price or more. CoreLogic recently reported that home prices and sales have increased back to pre-crisis levels and that the share of homes selling for the list price or more has returned to pre-bust levels. CoreLogic noted, "With inven - tory tight, homes are more likely to sell above the asking price." "Looser credit is fueling boom- ing first-time buyer demand," said Edward Pinto, co-director of the AEI's International Center on Housing Risk. "This, in combina - tion with shortness of supply as evidenced by a seller's market now in its 38th month, is fueling a vicious cycle that is driving real home prices higher—up 14 percent over the last 13 quarters and spur - ring calls for even looser credit." According to the report, the amount of homes selling at or above list price has recovered to early 2006 levels, clocking in at 3.5 times the trough in January 2008 and accounting for one- quarter of sales in October 2015. Despite market conditions, how - ever, there are still sellers remain motivated to sell. In October 2015, the inven- tory of existing homes for sale returned to January 2006 levels, but was still 33.1 percent below the July 2007 peak. Low labor and lot availability caused new-home numbers to drop 3.6 percent in October 2015. Pro Teck Valuation Services' October 2015 Home Value Forecast (HVF) reviewed inven - tory levels and the impact they have in the real estate market. "While new housing units are on the upswing, the numbers are still at historical lows," said Tom O'Grady, CEO of Pro Teck. "That, combined with approxi - mately 2.5 million single-family homes becoming rental units since the crash, has left the U.S. with a limited housing supply.