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Saturday, March 04, 2006

The Arizona Real Estate Market According To Zillow.com

I guess this article is sort of a follow-up to an article I wrote the other day, "Beware of Online Property Valuations Like Zillow.com".  When I wrote the first article, I had tried Zillow.com myself but had not read any reviews of it.  At this point, however, I have seen many reviews - some good, some bad.  Overall, I think the reviews confirm the point in my first article.  Relying on public records information to price your home is like throwing a dart - you will miss your target a certain percentage of the time. Since Zillow.com is available to home sellers everywhere, it probably works better in some places than others.  Again, I would guess the accuracy of Zillow's estimate is strongly related to the quality of the area's public records.  Perhaps in an area where public records are extremely accurate and available in real time (like MLS), Zillow might work okay.

In other areas, apparently, Zillow.com does not work so well.  I have read many reviews slamming Zillow.com, and not just by real estate agents either.  Here is an article from a Technology Columnist that claims in her random tests (assisted by real estate agents and title companies), the Zillow value was "sharply off" about half the time, and many were off by more than 20%.  I agree, since the Zillow.com value for both the Maricopa County properties I tested was off by more than 20% (under market value).  Most of the articles I've seen that actually tested Zillow.com say it is within 10% of the true value about half the time.  Half the time, are you kidding?  If your real estate agent claimed to price homes within 10% of true market value about half the time, would you use him?

I also read a newspaper article about Zillow.com that my friend saved for me.  As a Real Estate Agent, it made me laugh so I have to mention it here.  It was an article by Catherine Reagor in the "On Real Estate" section of The Arizona Republic dated 2/26/06.  The article was titled, "Higher Home Prices Discourage Buyers".  Catherine says there were 30,113 metro-Phoenix houses listed for sale in January 2006, while there were only 3,402 a year ago.  Probably true, I didn't check her facts because even if the facts are true, they were taken out of perspective in her article.  She goes on further to say that if you want a "reality check", you should go to Zillow.com, which "values several Valley homes for tens of thousands less than the price listed on them". That's where she lost me.  I did not even look for page D2 to finish reading the article!

First of all, Zillow.com does NOT set home prices in Arizona...Arizona homebuyers and sellers do (usually with a little help from a real estate agent and MLS!).  Second, last year was a record year for Arizona real estate.  Records are records because we don't set new ones every year, so it only makes sense that numbers will be down this year when compared to last year.  Sure, the "bubble is bursting " makes a great story, but why not compare current Arizona housing numbers to an average year before we decide the sky is falling?!  The market had to cool off compared to last year or it would have crashed completely at some point.  So it's a good thing that the Arizona real estate market is falling back into balance rather than being a crazy sellers market.  Is anybody really surprised that home inventories are up and sales numbers are down after a record year like 2005?  The media seems to be surprised, but then the media often has difficulty keeping things in perspective.

I think the Arizona Republic article mentioned above confirms what Aaron Freeman wrote in his last article, "Higher interest rates and increased media attention have resulted in a psychological shift in buyers’ views about the market causing a greater slow down in real estate sales than can be accounted for by the season alone".  While the Phoenix-metro housing market is slower than last year, it is still strong and is expected to remain that way for several years...no matter what Zillow.com or the Arizona Republic says!

The bottom line is that a house is worth what someone is willing to pay for it, and no website will ever be able to accurately predict that amount.  So sensible sellers will continue to call Real Estate Agents to help them price their homes.  Zillow.com, like HouseValues.com and many other wanna-be's may attract attention as a novelty, but they will never be MLS.  Like it or not, Realtors® own the best and ONLY real time databases when it comes to real estate sales data.  So sellers, don't rely on bad information when it comes to your most valuable asset...call your Realtor®!

Visit Shannon Hubbard's Home Page     Written By: Shannon Hubbard

Great American Realty, Inc.

Cell: (480) 695-6672
Email me

Posted by Shannon Hubbard, AZ Realtor & Computer Guru on March 4, 2006 | Permalink


Zillow undervalued my east valley home by about 18%... it is an interesting concept though...

Posted by: Mike Steves | Mar 7, 2006 9:37:42 PM

HomePriceMaps.com integrates Nationwide Home Sale prices with Google Maps.
To see how much homes have sold for in your neighborhood, simply go to HomePriceMaps.com and select your city or type in your zip.

Also-if they don't have data for your area available, if you email HomePriceMaps the site will usually update the site within a day or two and send you a follow up email.

Posted by: abe hoffman | Apr 14, 2006 3:21:21 PM

I went to homepricemaps.com and it is truely the worst service I have ever seen relating to real estate home pricing...1st it couldn't find my zip code...and I live in a big city...then when I found a way to FORCE it to look at my city, the information was almost total unhelpful...sure it listed one sale price in my entire half of the city (hows that for comps) but it didn't give the date or any details other than the seeling price....LAME!!!

Posted by: Christian | May 7, 2006 5:43:21 PM

LAME might even be an understatement.

Posted by: Eric | May 21, 2006 1:25:35 AM

I disagree with comparing Zillow to previous years. As inventory has never been higher, and vacant properties have never been higher- you are currently looking at a whole new world. I took the AZ Republic's sold values (they are in the paper every Friday or at AZCentral.com) and compared them with the Zillow figure- thereby comparing Zillow with what homes are selling for RIGHT NOW. I only did 85233 (Gilbert). As a Gilbert resident, that is the part of the valley I am most familiar with, and 85233 has virtually no new construction (which Zillow does not have available.)

For the most part, homes were selling at or less than their Zillow value, but ALL listed homes (Those in my study, and no I didn't shop for worse case numbers, they were the closest properties I could find to ones that had actually sold.)were listed HIGHER than Zillow.


You are welcome to check my study. I would love to see someone do something similar in other Zips (I'm not going to do it- it took hours to do the one comparison I did.) But there isn't a lot of point to "I think it is..I think it isn't" debate.)

Posted by: Twist | Jun 17, 2006 7:22:11 AM

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