I was asked that question recently at a novice homebuyer's seminar. I gave a rather luke-warm answer, because I really only had my anecdotal experience to pull from. I know that they get their information from county records and that they use information about recently sold property to update that information. I know that Zestimates can sometimes be pretty accurate and sometimes pretty inaccurate.
Well today I came across an article by James R. Hagerty in the Wall Street Journal Online. The Wall Street Journal did an analysis of 1000 Zestimates for homes in 7 states and found out what I already knew from experience. But the interesting thing is that they have hard data. Granted they only sampled 1000 homes, but given their results are similar to my expectations confirms that my gut sense is correct. Zillow was pretty darn close for about 1/3 of the estimates. The rest of the estimates were pretty equally split between those that were too high and too low. 11% of the time it was off more than 25%. Zillow was off more than 50% for 34 of the 1000 transactions reviewed.
There are a number of reasons for this. First, the Zestimator never visits the property. Zillow does not know if the home has been extensively remodeled or recently burned to the ground. Zillow does best in neighborhoods where all the homes are substantially the same and there are a number of recent home sales to support their estimates. In neighborhoods were there is a great variation in the style or size of homes or in rural areas, Zillow is less likely to be accurate.
Zillow is the first to say that their Zestimates are a starting point. I like to use Zestimates to look at property in other states or communities where I am unfamiliar with neighborhoods or property values. It gives me a clue about whether I'm looking in the right place or barking up the wrong tree.
For any tool to perform well you have to know what it is good for and how to use it. It is the same with Zillow. Proceed with caution and have fun!
Wednesday, February 14, 2007
Thursday, February 8, 2007
Decisions, decisions
If you are a first time homebuyer, you might be trying to decide between a house or a condo for your first big purchase. Before you decide, you should consider your lifestyle and weigh the pros and cons of each type of property very carefully.
In terms of lifestyle, are you single and looking to get into the real estate game and begin building equity? Or are you a couple just starting out and ready to make the jump from renting to owning? Or do you have a spouse, 3 kids, 2 hamsters and and a dog? What about the idea of having a pool that you don't have to personally maintain to lounge around on summer weekends? Or would you prefer a yard of your own where you can grow plants and veggies of your choosing and where you can host an intimate gathering of friends for a barbecue? The way you like to live is important when deciding where you want to live, so after you have answered questions such as these you can deliberate the pros and cons of condos and houses.
Condos- Pros
* Condos have easy upkeep, free of yard work and home maintenance responsibilities.
* They are usually centrally located, oftentimes in the heart of the city, so if you are an urban dweller, a condo could be a perfect location for you
* Condos often have amenities that single family homes don't always have, such as swimming pools, hot tubs, exercise facilities and gated communities
Cons-
* Condos have monthly fees, called HOA dues which can be costly when added onto the mortgage
* Within the Home Owners Association (HOA)is shared decision making which means you will have to go through the condo board to make any changes on the interior of your unit
Houses- Pros
* Houses are family friendly, with their own yards for the pets to roam and the kids to play, plus garages and basements for storage. And there are no shared walls or ceilings or floors, so it's okay if Jenny jumps rope on the hardwood floors in the living room at 10pm on a Tuesday.
* Houses generally have more living space than a condo. Kids and grownups alike need extra space. Determine how much you will need or if you will work from home or have a hobby that requires more space.
Cons-
* When you own your own home you are responsible for all of the maintenance. Any improvements you make, however, will probably pay off in the long run in the form of higher resale value.
* Higher costs are usually associated with a single family residence. These include unforeseen maintenance costs, higher heating/cooling costs, cost for furniture to fill the rooms, yard maintenance costs as well as the mortgage itself.
Whether you buy a house of a condo, you should think about the neighborhood and where it is currently as well as where it is heading. The investment you make could hinge on this one factor, so consider wisely.
In terms of lifestyle, are you single and looking to get into the real estate game and begin building equity? Or are you a couple just starting out and ready to make the jump from renting to owning? Or do you have a spouse, 3 kids, 2 hamsters and and a dog? What about the idea of having a pool that you don't have to personally maintain to lounge around on summer weekends? Or would you prefer a yard of your own where you can grow plants and veggies of your choosing and where you can host an intimate gathering of friends for a barbecue? The way you like to live is important when deciding where you want to live, so after you have answered questions such as these you can deliberate the pros and cons of condos and houses.
Condos- Pros
* Condos have easy upkeep, free of yard work and home maintenance responsibilities.
* They are usually centrally located, oftentimes in the heart of the city, so if you are an urban dweller, a condo could be a perfect location for you
* Condos often have amenities that single family homes don't always have, such as swimming pools, hot tubs, exercise facilities and gated communities
Cons-
* Condos have monthly fees, called HOA dues which can be costly when added onto the mortgage
* Within the Home Owners Association (HOA)is shared decision making which means you will have to go through the condo board to make any changes on the interior of your unit
Houses- Pros
* Houses are family friendly, with their own yards for the pets to roam and the kids to play, plus garages and basements for storage. And there are no shared walls or ceilings or floors, so it's okay if Jenny jumps rope on the hardwood floors in the living room at 10pm on a Tuesday.
* Houses generally have more living space than a condo. Kids and grownups alike need extra space. Determine how much you will need or if you will work from home or have a hobby that requires more space.
Cons-
* When you own your own home you are responsible for all of the maintenance. Any improvements you make, however, will probably pay off in the long run in the form of higher resale value.
* Higher costs are usually associated with a single family residence. These include unforeseen maintenance costs, higher heating/cooling costs, cost for furniture to fill the rooms, yard maintenance costs as well as the mortgage itself.
Whether you buy a house of a condo, you should think about the neighborhood and where it is currently as well as where it is heading. The investment you make could hinge on this one factor, so consider wisely.
Tuesday, February 6, 2007
On Being a First Time Buyer in 2007
If you're finding its hard to make that jump into the real estate market---you are not alone.
The share of first-time home buyers dropped from 30.5 percent in 2005 to 27.1 percent in 2006 in California, according to a real estate market report released today by the California Association of Realtors (CAR); The State of the California Housing Market.
Getting finances in order so first time buyers can jump in has become harder and the measures buyers must go to have grpwn. The report found that the share of buyers who used a second mortgage rose from 38 percent in 2005 to 43 percent in 2006, which is the highest percentage since 1982. And the share of home buyers with zero down payments increased from 4.5 percent in 2000 to 21.1 percent in 2006, the Realtor group reported.
Leslie Appleton-Young, vice president and chief economist for the C.A.R, said in a statement that two out of five first-time buyers made a zero down payment on their home purchase, while one in 10 repeat buyers purchased their home with no down payment.
The C.A.R survey also found that the share of buyers who used a second mortgage climbed from 38 percent in 2005 to 43 percent in 2006 -- more than triple the percentage since 2001, and the highest percentage since 1982.
Home sales in the San Francisco Bay Area fell at a slightly lower rate than for the state as a whole, the association reported. After peaking in 2004, Bay Area sales declined 10 percent in 2005 and declined another 19 percent in 2006.
The median price in the Bay Area -- the highest of any region in the state -- continued to increase by small single-digit increments throughout 2006, "in part because of inventories that were well below the statewide levels," according to the report.
The share of first-time home buyers dropped from 30.5 percent in 2005 to 27.1 percent in 2006 in California, according to a real estate market report released today by the California Association of Realtors (CAR); The State of the California Housing Market.
Getting finances in order so first time buyers can jump in has become harder and the measures buyers must go to have grpwn. The report found that the share of buyers who used a second mortgage rose from 38 percent in 2005 to 43 percent in 2006, which is the highest percentage since 1982. And the share of home buyers with zero down payments increased from 4.5 percent in 2000 to 21.1 percent in 2006, the Realtor group reported.
Leslie Appleton-Young, vice president and chief economist for the C.A.R, said in a statement that two out of five first-time buyers made a zero down payment on their home purchase, while one in 10 repeat buyers purchased their home with no down payment.
The C.A.R survey also found that the share of buyers who used a second mortgage climbed from 38 percent in 2005 to 43 percent in 2006 -- more than triple the percentage since 2001, and the highest percentage since 1982.
Home sales in the San Francisco Bay Area fell at a slightly lower rate than for the state as a whole, the association reported. After peaking in 2004, Bay Area sales declined 10 percent in 2005 and declined another 19 percent in 2006.
The median price in the Bay Area -- the highest of any region in the state -- continued to increase by small single-digit increments throughout 2006, "in part because of inventories that were well below the statewide levels," according to the report.
Friday, February 2, 2007
Kindergarten Khaos
Sunday night was an interesting night in Alameda. More than 60 people lined up outside of Edison Elementary, a consistently high ranking school on the east end of the island, in order to get their children into kindergarten. The school sent out more than 100 packets to families of future kindergarteners even though they don't have enough space to accommodate all of them. There was a succession of phone calls on the east side Sunday evening, as parents got wind of the fact that their mere presence in the district wasn't enough to guarantee their kids a slot. By 9:00 pm, parents were converging in front of the Edison office with their sleeping bags, ready to camp out. Edison's principle, Marcheta Williams, told KTVU and Kron4, both of whom sent reporters to the school, that it wasn't "an audition for American Idol, this is kindergarten".
Parents were upset that the district hasn't made a plan to accommodate their children in the zones that they live. They also expressed irritation at the fact that there is no "sibling priority" at any of the schools in the district, meaning that it is likely that some siblings will be split between schools. At the "coffee with the superintendent", Ardella Dailey last week, it was a topic of discussion. When questioned about the lack of sibling priority, Dailey simply implied that there is no priority and there are no plans to implement it.
AUSD also held the second of three meetings last night to discuss cutting $2 million dollars from the school district's funding by closing Wood Middle school, increasing class sizes for 9th graders, eliminating some high school counselors and reducing support for athletic programs.
Our schools are already in crisis. The more cuts that are made, the more parents are going to pull their kids out of public school and put them in private, further decreasing funding. AUSD already receives much less per student than other Alameda county schools. What will it take to turn this around? It's time for us to rally for our kids and change this cycle. It really can't continue on like this.
Parents were upset that the district hasn't made a plan to accommodate their children in the zones that they live. They also expressed irritation at the fact that there is no "sibling priority" at any of the schools in the district, meaning that it is likely that some siblings will be split between schools. At the "coffee with the superintendent", Ardella Dailey last week, it was a topic of discussion. When questioned about the lack of sibling priority, Dailey simply implied that there is no priority and there are no plans to implement it.
AUSD also held the second of three meetings last night to discuss cutting $2 million dollars from the school district's funding by closing Wood Middle school, increasing class sizes for 9th graders, eliminating some high school counselors and reducing support for athletic programs.
Our schools are already in crisis. The more cuts that are made, the more parents are going to pull their kids out of public school and put them in private, further decreasing funding. AUSD already receives much less per student than other Alameda county schools. What will it take to turn this around? It's time for us to rally for our kids and change this cycle. It really can't continue on like this.
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