Online real estate’s posterchild for pricing inaccuracy (warning: I have been overusing posterchild lately) has been working hard to combat that image with the release of their 4th quarter market report. Zillow has been the subject of scrutiny for the wide range of inaccuracies in their pricing of specific properties called Zestimates (and their incompatibility with Mac’s Safari browser – must use Firefox). But hey, its still in beta a year after launch.
Hint to Zillow: if a Zestimate is priced to the dollar, even with a range, it infers accuracy to the dollar. I wrote about expectations of precision last week in Values: Being Precise About Precision Expectations (aka Good Enough).
But market reports are a different animal. The attempt to value amenity differences (ie sq ft, room count, lot size, etc.) confuses many consumers and has been controversial due to inaccuracy issues. They buy national data feeds, not unlike many online service providers, and use this to come up with their Zestimates. The use of this data to attributes of a specific property is what has been tough for them (or anyone) to figure out to date.
Zillow has used this same data to crunch numbers for the quarter. However, their market studies use pricing as the main data point and there is limited consideration of amenity differences (other than location). This simplicity allows the reports to appear to be accurate, although I can’t vouch for every market.
When you consider the options for national data sources like NAR, which is a trade group and OFHEO which includes refi data in their results, you don’t have a lot of pure choices. That sounds like a cheap shot to Zillow but its not meant to be.
The report is a whole lotta spreadsheets by MSA, broken down by median sales price (Zindex). In the markets I am familiar with, the results seem to make Zense.