Real estate valuations have customarily leaned heavily on historical data as one of the most important factors used to determine the appraised value of homes. This data includes comparable transactions and cap rates from prior years, along with historical real estate market data. However, there are a few areas that the past-anchored valuation system fails to build into the appraisals, leaving an appraisal gap that is becoming difficult to ignore in 2026. For lenders, this creates a problem when appraisals fall short of the initial estimated property value, or exceed it, and loans need to be restructured as a result.
