Estimates Widens for Sixth Consecutive Month
Gap between Home Appraisals and Owner Estimates Widens for Sixth Consecutive Month
• Quicken Loans’ National HPPI shows appraised values were 1.93% lower than homeowners estimated in May
• Home values rose 0.63% nationally in May, with a 4.92% year-over-year increase, according to the Quicken Loans HVI
DETROIT, June 13, 2017 – Home values continue to lag owners’ expectations. Appraised values were an average of 1.93 percent
lower than what homeowners expected, according to Quicken Loans’ National Home Price Perception Index (HPPI). The gap between estimated value and appraised value, on a national level, continued to widen for a sixth consecutive month.
Appraisals are falling farther from owner estimates, but they are rising higher each month. Home values rose an average of 0.63 percent in May, and increased 4.92 percent year-over-year, as measured by Quicken
Loans’ National Home Value Index (HVI).
Estimates Widens for Sixth Consecutive Month
Gap Between Home Appraisals and Owner Estimates Widens for Sixth Consecutive Month
Home Price Perception Index (HPPI)
At the beginning of the mortgage process a homeowner estimates what their home is worth. Later in the process an appraiser reviews the home, and the local comparable sales,
to establish their opinion of the home’s value. The Quicken Loans HPPI showed that owners’ home value estimates were an average of 1.93 percent higher than appraisers’ opinions of the value, at a national level. There was a slight widening between the two
data points since April, when there was a 1.90 percent difference. May is the sixth month the two valuations moved farther apart. Despite the national average, perceptions varied across the country. In Denver or Dallas appraisals were nearly 3 percent higher
than expected, while in Philadelphia or Baltimore appraised values were more than 3 percent lower than what homeowners estimated.
“It’s important for consumers to see the HPPI and not only think about the difference in perceptions, but the different perceptions across the country, said Bill Banfield,
Quicken Loans Executive Vice President of Capital Markets. “Home values, and home value changes, vary widely depending on the city you’re in. Homeowners, and those looking to buy a home, should keep a close eye on their local market to better understand home
values in their area, and the trend they are on.”
Home Value Index (HVI)
Home values rose at a national level, and in much of the country, according to the Quicken Loans HVI – which measures home value changes based solely on appraisals. Nationally,
appraised values increased 0.63 percent from their level in May, and rose 4.92 percent when viewed annually. The Northeast was the only region measured that showed a home value loss, with appraisals dropping 1.63 percent since the previous month. However all
four regions had year-over-year gains, ranging from a 1.15 percent increase in the Northeast to a 6.85 percent increase in the West.
“The strong demand for housing paired with the low levels of inventory continue to push values higher,” said Banfield. “Prices are rising as values push higher, making
many parts of the country enticing markets for sellers. Many owners will find that they can get more than expected out of their home.”
The main reason that most folks refinance a mortgage is to take advantage of a lower interest rate and thereby end up with smaller monthly payments. But that's not the only possible reason.
You might refinance a 30-year loan into a 15-year one, ending up with larger payments, but fewer of them and less total interest to pay. Here's a review of these and other reasons to refinance your home loan.
Interest rates are rising, so lock in a lower rate to save money
everyone knows that lower interest rates mean lower payments, but many people might not realize just how much of a difference a lower rate can make. Check out the table below, reflecting payments
for various interest rates for a $200,000 30-year fixed-rate mortgage:
Data source: Bankrate.com, plus calculations by author.
If you can lock in an interest rate that's a percentage point lower than what you have, you may be able to save $40,000 or so over 30 years. (Note that when you go through the
pre-approval process opens a New Window., you can probably find out exactly how much you can save.)
Your credit score has improved
If your credit score has improved considerably in recent years, you may now qualify for a significantly lower mortgage interest rate -- even if overall rates have been rising. Low credit scores
keep home buyers from being offered great
interest rates Opens a New Window.. Check out the table below, which shows what a difference a strong credit score can make, using the same mortgage example as above:
Data source: MyFICO.com, as of mid-February 2017.
If you're currently carrying a mortgage at a high rate, consider spending the next few months or the year ahead increasing your credit score so that you might refinance at a lower rate. Some
ways to Window. Include paying bills on time and paying off a lot of debt in order to lower your debt-to-available-credit ratio. Lenders like to see you owing only about 10% to 30% of the sum of all your credit limits, because it suggests that you have your
debt under control and can afford to take on some more debt via the mortgage you're seeking. You can get Window. Of your credit reports once a year from each of the main credit reporting agencies -- do so and correct any errors on them.
You might want a different kind of mortgage
Another good reason to refinance is if a different kind of mortgage makes sense for you now. For example, if you started out with an adjustable-rate mortgage (ARM), you may be facing gradually
increasing interest rates over the coming years -- which will be costing you more and more. You could refinance into a fixed-rate loan, locking in a low rate. (Even today's increased rates are historically very low.)
Alternatively, you might switch from a 30-year fixed-rate loan into a 15-year fixed-rate loan, in order to pay the loan off sooner and pay much less in interest. It will likely entail higher
monthly payments, though, so be sure you can swing those. (A good alternative is to keep the 30-year loan and just make extra payments regularly, in order to shrink the principal.) If you’re current loan's monthly payments are too steep for you (which might
be the case if you have a 15-year mortgage now), you might refinance into a fresh 30-year loan for the lower payments. Just know that that will be costing you a lot in interest over the long run, and entering retirement with mortgage payments is not ideal.
When refinancing is not a great idea
There are some situations in which refinancing doesn't make the most sense. For example:
If you don't think you'll stay in your home long enough to recoup the closing costs for the refinancing (yes, there are closing costs the process is very much like getting your initial mortgage), then don't refinance.
If your closing costs are $2,500 and you'll be enjoying monthly payments that are $100 lower, then it will take you 25 months to break even so that the refinancing was worth it.
If you won't be able to reduce your loan's interest rate by about 1 percentage point, a general rule of thumb suggests that going through the trouble of refinancing may not be worth it.
If you're refinancing in order to take out some of your home equity, think twice. You'll often end up with a bigger loan balance than you had before refinancing, and less equity in your home, too. In exchange for that,
you did receive a chunk of change, but if you used it to remodel a kitchen or buy a new car, you probably won't come out ahead, financially. The car will start depreciating immediately, and most remodeling costs more than any increase in value when you sell
the home. Only cash out if you really need the money. Every dollar you borrow with your mortgage will likely take a long time to get paid off, costing a lot in interest.
If you're refinancing in order to consolidate debt, perhaps because you'd like to pay off high-interest rate credit card debt with low-interest mortgage debt, think twice. It can be
an effective strategy, but if you're saddled with credit card debt because you tend to spend beyond your means, then you're not likely to suddenly change your ways. You'll instead be taking on more long-term debt, while feeling unburdened by credit card debt
and perhaps feeling freer to spend beyond your means again.
Think your situation through to see if refinancing is a smart move for you. It is for many people, potentially saving them tens of thousands of dollars.
The $16,122 Social Security bonus most retirees completely overlook
if you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as
$16,122 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after.
May 19--Developers and government officials are preparing to welcome the nation's largest mattress company, Serta Simmons Bedding, to move its headquarters to the site of a torn-down General
Motors plant in Doraville.
Serta Simmons would bring 500 jobs, a four-story office building, a parking deck and a research facility to the site, now known as Assembly.
Serta Simmons is the first major business to locate on the 165-acre property, boosting hopes for redeveloping an area that hasn't been used since 2008, when GM's last
minivans were manufactured.
The company said the deal hasn't been finalized, but the Doraville Development Authority awarded $16.8 million in
potential tax incentives to Serta Simmons earlier this month, according to documents obtained by The Atlanta Journal-Constitution through a Georgia Open Records Act request.
Atlanta Market Update
1Q 2017 ATLANTA OFFICE MARKET
According to the Bureau of Labor Statistics, the unemployment rate rose 0.2 percentage points from 5.1% in January 2016 to 5.3% in January 2017. The unemployment rate increased due to more people
looking for work and compares favorably to Georgia (5.5%) and higher than the US (4.8%). The Atlanta metropolitan statistical area nonfarm job creation totaled 96,800 in the Atlanta-Sandy Springs-Roswell metropolitan statistical area over the past year. Office
using jobs (information, professional and business services and financial activities) added 35,100 jobs during the past year.
The Atlanta office market recorded a negative 182,009 square feet (sf) of overall absorption during 1Q 2017. Direct absorption totaled negative 13,178 sf. Absorption during the first quarter was
off to a slow start for 2017. Major occupancies by State Farm, Anthem, Regus, Kore Telematics and Rock 10 were not able to overcome vacancies by Coca Cola, State Farm sublease and several small to mid-sized companies. Absorption is expected to increase during
the rest of 2017. Global Payments, State Street Corp., Racetrack, Anthem, and Equifax are all expected to occupy more than 50,000 sf during 2017. As the Class A vacancy rate continues to drop, demand for space in Class B buildings is expected to increase.
Currently, only ten existing Class A buildings can accommodate a user larger than 100,000 sf. Demand for space is expected to continue as corporations continue to find Atlanta a good match for their Southeast destination.
Due to an ongoing increase in demand for space, the total vacancy rate has dropped from 17.2% in 1Q 2016 to 17.1% at the close of first quarter 2017. Direct vacancy rates dropped 0.3 percentage
points from 16.5% to 16.2% during the same time period.
Weighted average rent growth continued to improve during 1Q 2017 especially in Class A properties in Buckhead, Midtown and Central Perimeter. Weighted average asking rents in all classes rose 5.0%
recording $23.38 per square foot (psf) at the close of 1Q 2017 compared to 1Q 2016. Class A weighted average rents rose 6.2% year-over-year, recording $26.20 psf at the close of 1Q 2017. Class B rents rose 1.8% year-over-year, recording $20.33 psf at the close
of 1Q 2017. We expect rents to continue increasing during 2017 with higher escalations in Class A buildings in submarkets with low vacancy and construction activity. Class B weighted average rents are expected to follow suit as options in Class A buildings
- Steve Harriss, Atlanta's Director of Analytics