Zillow values us below our 2001 cost

chisueJune 17, 2011

I guess it had to happen eventually.

Zillow now values our home at under our cost in 2001 (lot + new construction). There are still foreclosures in our area, although fewer than previously. A nearby home that started at $2.1M over a year ago seems to have sold in foreclosure for under the $1.4M most recent price. Another neighbor lost both his home and his bank last year.

One bright spot here is that we have no plans to sell.

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lyfia

Since you're not planning to sell it seems like it would be a good thing for you. You could get your taxes reduced.

    Bookmark   June 17, 2011 at 2:51PM
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bus_driver

From my perspective, the only time I want my house to have high value is if I plan to sell it. High value means higher taxes.

    Bookmark   June 17, 2011 at 4:33PM
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brickeyee

Zillow is notoriously inaccurate.

All it can do is (barely) go by proximity of other sales.

I have a 1930s house that is surrounded by infill houses from the mid 1970s in an area of much lower cost houses.

Zillow sees all the nearby houses and thinks it is a $400,000 neighborhood.
The house behind me just sold for $880,000 on an 1/8 acre.
Mine is on 1/3, and while older has been completely updated (it was gutted and rebuilt, with multiple additional rooms).

    Bookmark   June 17, 2011 at 4:50PM
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logic

IMO, I think Zillow should be required to explain exactly how they come up with their valuations. As a hobby, I check on the homes in our development about once a month. Homes that are essentially the same, with the same assessed value will have different values each time I check.

Case in point...a neighbors house the same as ours, but with more upgrades and a higher assessment (and a higher sale price 10 years ago when we bought the homes new) was recently knocked down by Zillow about 30K. We were pumped up 15K. Have no clue as to why.

The values on the same homes shift with no relationship to recent sales, assessments etc., yet Zillow is referred to all of the time in news articles in terms of valuing the housing market as if they are providing accurate information.
That said, where is Zillow getting these off the wall figures?

    Bookmark   June 17, 2011 at 6:06PM
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bob_jamison

I don't think it's wise to use Willow as anything other than a rough estimate, at best. In a tract neighborhood like mine, it's probably more accurate than in situations like brickeyee's.

I try not to think about how much our house has gone down -- approximately $200k since we bought it. We're $100k underwater, which stinks (especially as we'd like to refinance). But we don't plan to sell for a long while, so hopefully things will turn around eventually.

    Bookmark   June 17, 2011 at 6:32PM
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LuAnn_in_PA

meh... Zillow has MY house at at price from decades and decades ago. ($32,800)
Nothing in my area is less than $200,000.

    Bookmark   June 17, 2011 at 7:59PM
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logic

Spot on article from Mortgage News Daily although IMO the title is an understatement.

Here is a link that might be useful: Zillow Not Quite Ready for Prmimetime

    Bookmark   June 17, 2011 at 9:12PM
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chisue

Oh, I know about Zillow's problems with guessing an *individual* property's value. I was jus' sayin'. lol I know how their valuation of our house is flawed, however we are still being dragged downward by the overall market.

In addition to an area-wide down RE market, I look at what's sold in the last month (and where) in my town. There was a cluster of sales within a mile radius in less expensive neighborhoods ($400-500K), plus the $1.4M foreclosure IN my neighborhood. There is also a 'white sale' *listing* in my neghborhood (due to a sudden death).

Looking at the Big Picture in my town and all along Chicago's North Shore, our house is trending down with the others. The bad economy that impacted overreaching 'little people' quickly has now reached some 'biggie' overreachers. It's just taken longer. We have lakefront mansions selling for half their 2007-8 market values -- IF a buyer has enough cash to get financing on the remainder.

My assessment dropped this year and last. My taxes, however, went UP -- *because* assessments are down. The town has to get more income from each homeowner still able to pay RE taxes. (I still consider our RE taxes a bargain for the services we receive.)

What's happening in YOUR area? Anywhere bottomed out? Please say where you are; just a general area is fine.

    Bookmark   June 18, 2011 at 10:55AM
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sweet_tea

Welcome to the lowering of real estate values across the spectrum of all price ranges. Chicago didn't suffer the downturn as quickly or violently as FL and NV.

In my area, property is pretty much 50% lower in value now for all price ranges of properties (mega mansions and starter homes and everything in between).

I think FL has bottomed out. You are seeing much more activity in FL now - even new homes being built over past 8 months and sales volume of all real estate increasing quite a bit. But property values are still approx 50% of the height of the market. Prices are still very decent and don't seem to be rising. But they don't seem to be falling either. New foreclosures have slowed down a lot. Glut of inventory in MLS has been selling and not nearly as much volume of available homes now in MLS. All good signs.

    Bookmark   June 18, 2011 at 11:15AM
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LuAnn_in_PA

I'm in western PA, where we never had a year of decreased values.

    Bookmark   June 18, 2011 at 11:03PM
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ncrealestateguy

Luann in Pa... are you sure that your area has seen appreciation year after year, even during the past 4 years? That is hard to believe.

    Bookmark   June 19, 2011 at 8:23AM
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lyfia

She didn't say appreciation - she just said decreased values. There are lots of areas that have not seen a change because they were not an area where huge increases happened or increased at all. Several areas have remained at the same level, not increased, but not decreased either, and then there are some that still have been appreciating.

    Bookmark   June 19, 2011 at 9:31AM
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logic

Every area is unique unto itself. Our area
in central NJ did not depreciate very much
at all especially in the under $600K category.
However as this area did see a glut of
3500SF to 8000SF homes built at the height
of the market, those homes have depreciated
in price to the tune of 100K to 500K
depending upon the original purchase price.
Most of the homes on the market in this area
those in that price range. Interestingly
Enough, developers are building more of
the same. ....this in a county that was recently
determined to have THE highest median
property taxes in the country. Go figure

    Bookmark   June 19, 2011 at 10:28AM
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jboling_gw

We're in the proverbial "unique" situation. Our condo building was constructed in 2006-2007 in my Chicago suburb's downtown area, during the beginning of what was envisioned to be a huge transformation of our downtown into a residential/commercial development boom. We paid top dollar for our 2,200-square foot penthouse condo, as did others in the smaller units in our building.

Then the bad economy hit full force, and the plans for our downtown died. So, Zillow compares us to the old, small, nearby condos that sell for sometimes $300,000 less than ours.

I don't think the Zillow estimate hurts us--it's just the general decline in prices that matters.

    Bookmark   June 19, 2011 at 11:38AM
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LuAnn_in_PA

"She didn't say appreciation - she just said decreased values. There are lots of areas that have not seen a change because they were not an area where huge increases happened or increased at all. Several areas have remained at the same level, not increased, but not decreased either, and then there are some that still have been appreciating."

Exactly!

    Bookmark   June 19, 2011 at 11:52AM
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chisue

luann -- I hear that. What kind of appreciation has there been in your area, historically? Is RE pretty stagnant? (Not always a bad thing!)

Readers/responders: It's not as helpful to hear dollar declines as it is to hear percentages. (I can't tell how much value logic's illustrations have lost when I hear $100K to $500K without knowing the original values.)

Hmm...maybe we could use price per square foot to get a more 'even' picture? Nah, that doesn't take into account lot size or neighborhood. Fooey. Hard to get a handle!

    Bookmark   June 19, 2011 at 12:46PM
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Billl

FYI - Zillow just launched a new formula for pricing homes. In my area, it is horrible. They were pretty accurate before, but now the valuations are in left field.

    Bookmark   June 19, 2011 at 5:22PM
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LuAnn_in_PA

"luann -- I hear that. What kind of appreciation has there been in your area, historically? Is RE pretty stagnant? (Not always a bad thing!) "

Very slow appreciations, but really not a stagnant market. Because of the low housing prices, and the low amount of rental properties available, the sales are fairly good.

It's cheaper to buy housing than to rent in western PA.

Here is a link that might be useful: Home prices rose in region in first quarter Read more: http://www.post-gazette.com/pg/11151/1150398-100.stm#ixzz1Pm0CdRbr

    Bookmark   June 19, 2011 at 8:54PM
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LoveInTheHouse

Logic, is that anywhere near Atco? When we were house hunting there, we learned real fast not to look at anything in Atco. I don't know how anyone sells a house in that town with those taxes!

    Bookmark   June 19, 2011 at 11:20PM
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logic

Atco is in South NJ in Camden County which is probably the poorest county in NJ; therefore, the property taxes are out of proportion to property value...average home price 115K..average tax bill 5K.

Or central NJ county's median tax bill is $8,216 with median new home price at about 500K.

    Bookmark   June 20, 2011 at 3:54PM
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biochem101

Philadelphia suburbs are still going slowly down. At least in my neighborhood. I thought we had flattened out last Spring ~440K, down from a high ~525K. Now it's looking more like I'd be lucky to get ~399K if I have to sell.

That's my figures from following local area houses for sale, and particularly focusing on ones the same style-size as mine. The ones that were selling [relatively quickly] only a short while ago seemed to be asking 419K.

Now there is suddenly a whole new crop up, in addition to the perennials that haven't sold in forever, and a fair number are listing at 399K. I guess they figure to go under everyone else to get the sale. But there's a whole page of them (at 399)! 4BR, 2.5BA, colonial, ~2500 sq. ft.

Oh there's some that are pricing themselves at $477-512, but I think they are dreaming. The houses are all relatively similar, who would pay that much more?

We have had a trickle of foreclosures. 1 or 2 a year. Was surprised to find (June 19) there are currently 3 (2 new). Guess we haven't hit bottom yet.

Oh, and I find Zillow fairly accurate. They give my house 423K. Slightly above what I think I could get, mainly because there are so darn many for sale and so few buyers.

    Bookmark   June 20, 2011 at 4:29PM
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LuAnn_in_PA

ncrealestateguy ...

here's a WSJ article dated today about my area.

Check out the chart in the article!

Here is a link that might be useful: Housing Bust? What Housing Bust? For people living in Pittsburgh, there was never really a home-price bubble to burst

    Bookmark   June 20, 2011 at 7:00PM
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chisue

I've seen more recent sales of REO's here. Guess the banks have *realized* they need to DO something to unload these homes. We should probably be glad banks didn't dump them all at once! However, I think this was less thoughtful strategy and more likely just ineptitude!

    Bookmark   June 21, 2011 at 3:12PM
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nancyinmich

I have a report from Michigan, just north of Detroit. Sterling Heights is a solid middle class suburb. Most houses were built since the 1960s, yet there is still open space for the huge-house boom that hit in the 2000s here. There are subs with tract homes like ours, and subs with custom mega-homes or semi-detached condos with more peaks and valleys than any house needs in the roofline. The tax base is not just from residential property tax. We have several automotive plants, defense contractors, and shopping centers everywhere. Our restaurants serve food from a multitude of cultures from the Middle East, Asia, Eastern Europe, the Caribbean, and Central America! We have a similar mix of languages spoken in our neighborhood, as well.

We moved here in late 2005. We bought our 1675 sq ft home on a corner lot for $202,000. Prices have been falling ever since. The identical house across the street has been for sale for a couple of years. It sold on 6-15-11 for $130,000. The city's appraiser site shows that it last sold in 1995 for $132,000. So it is now worth $2000 less than it was 16 years ago! Zillow is pretty close to reality here. It says that our Sterling Heights house is worth $127,000.

I bought my first house in this part of the state in November 1994 for $69,900. By 2005, we had changed out the furnace, added air, replaced all windows and exterior doors, replaced the concrete driveway and patio, added a concrete front porch, re-sided the house, added attic and wall insulation, refinished the oak floors and replaced the kitchen. I landscaped and added an aluminum wrought-iron looking fence outside. We put the house up for sale in early 2006, after repainting the interior and doing other small repair projects. It never sold. It was worth $160,000 when we started trying to sell (house across the street sold for that) and now we might be able to get $70,000. Too bad the mortgage is $100,000 and the HELOC we got for the down payment on our new house is now at $30,000! We have paid down the HELOC by about $12,000, plus replaced the heating and cooling in our new house and remodeled the kitchen there using a set of good 24 year-old refinished cabs from Green Demolitions. As long as we both are working, we do well with all of the mortgages, but we cannot afford to lose a job. Our old house will start bringing in rent again in the next few months, too. For about two years, we got the first mortgage covered by someone in the house rent-to-own, but the deal fell through when she bought a fixer-upper in the neighborhood for $56,000.

    Bookmark   June 30, 2011 at 8:44PM
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jakabedy

Zillow is wacky. They have indeed changed the algorithm and are now better utilizing user-added info. I checked in today after reading this thread to see that our value had gone UP 16% in the last 30 days. Really? Nice, but, really? I had gone in back in January and updated our data (they had us as a 3BR but we are a 4BR -- always have been). Maybe it took this long for the change to hit? The current value is much more in line with what the value should be (about 5% less than we paid in 2007) and much higher than Zillow had it at during the lowest points of 2009-2010.

    Bookmark   July 1, 2011 at 10:58AM
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chisue

In our area Zillow should pay more attention to the township tax appraisals, which better reflect the neighborhoods -- not lump together all houses within a radius.

We back to a conservancy that is part of a newer development. That neighborhood never brings the same prices as houses along our 'Coveted X Road' (Realtor-ese). Teardown *lots* on our road bring more than those properties.

    Bookmark   July 3, 2011 at 6:21PM
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annkathryn

In California tax appraisals mean nothing due to Prop 13. My house just went up $114K last week according to Zillow. It's still below what I believe the market value to be, based on recent sales in my town. I'm not sure what went into the algorithm for my neighbor's house - it zoomed up from $1.5 million to $2.5 million last month, and has now settled back down to $1.7 million.

Zillow seems to have a hard time keeping up with sales data, since many houses still show as being for sale which have long ago shown up as sold on the MLS.

    Bookmark   July 3, 2011 at 11:18PM
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sweet_tea

Florida's market is showing signs of improvement. A large development is raising prices by 8-10%...see newspaper article link:

Here is a link that might be useful: Newspaper Article- Price Increase new lots

    Bookmark   July 13, 2011 at 8:24AM
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