Saturday, February 10, 2007

Sacramento's Zindex

From Zillow Blog:

Overall, across the U.S. areas Zillow covers, home values showed their first year-over-year (YoY) decline since the start of the data series in 1997, with the Zindex recording a slight decrease of 0.48% from its Q4 2005 level (see the figure below). This is substantially down from the year-over-year increase of 5.0% in Q3 and the quarter-over-quarter (QoQ) change of -4.8% for Q4 is significantly off the 2.4% QoQ increase in the prior quarter.

Performance varies widely by metropolitan area as seen in figure below showing year-over-year appreciation rates for the top 25 largest metro areas. Seattle, Portland and Charlotte appear to be booming with YoY increases above 11%. Greenville, Sacramento and Boston are lagging with YoY decreases greater than 5%.
You can download the Sacramento spreadsheet here [xls]. Some highlights:

YoY Zindex Change
  • El Dorado: -4.81%
  • Placer: -5.97%
  • Sacramento: -6.74%
  • Yolo: -8.64%
  • Sacramento (city): -6.75%
The spreadsheet also contains information by city and neighborhood.
  • Cities in the region with a negative Zindex: 84%
  • Neighborhoods in Sacramento (city) with a negative Zindex: 90%
What is a Zindex?
The Zindex home valuation index is the median Zestimate valuation for a given geographic area on a given day.
How does it differ from the median sales price statistic?
One popular method is using the median sale price of homes over a certain period of time, such as a month. While interesting, this measure is problematic because it is influenced by the mix of housing sold in the period of time associated with the metric.

For example, if high-end homes were not selling very well, but mid-range homes were, then the median sale price will be lower than it should be. It will not be an accurate reflection of the "general" level of home values because the median is taken from the set of mid-range home sales that happened in the period, ignoring the high-end homes that didn't sell. The median sale price would be a perfectly accurate reflection of home values in an area if every home were bought and sold in the particular time period. Since this is highly unlikely, the median sale price is biased to the extent that the homes sold in a given period are not completely representative of all the homes in the area.

12 comments:

Sold in '05 said...

Some new Sacramento Area inventory numbers have been posted at the Bubble Inventory Tracker site -

http://bubbletracking.blogspot.com/2007/01/tracking-sacramento-metro.html

Inventory still climbing for the year. Now up about 1200 since 1/1. Right on track to make '06 look like there was a shortage...

Sippn said...

Zillow is an interesting tool in that you can use it to pull public data fairly easily, but...

I have found it is only close (within 15%) in tract neighborhoods where there are a lot of homes of the same footage. But not really close enough.

In the neighborhood I moved from, the house I lived in for 3 years is still shown as an empty lot. The comp across the street is not used for comparisons - although it is the closest home to compare to within several miles.

It doesn't know weather there is a crack house next door, a noisy road, or unrestricted view. And if it has a view, it isn't using California values to price it.

It would be nice if Zillow would profile their company's real estate knowledge besides "mom's real estate license in 2005" and that the "two founders have bought homes for the past 15 years"

AgentBubble said...

I've never been very fond of Zillow. As a real estate agent, I'm constantly in "competition" with Zillow's pricing tools. When I tell a prospective client what I think their home is worth, I usually here "But Zillow says..." Zillow estimated one of my tract listings in Elk Grove for $517K, yet the price should be closer to $430K. I had one client stay at $365K for two listing periods becasue Zillow said that was what it's worth. I called him yesterday because the listing was expiring and told him his same house just sold for $40K cheaper, but he still wouldn't budge. I'm told him it would be better to list with someone else at this point.

In my opinion, Zillow has a nice graphical interface, but using it for serious comps is not a good idea.

arizonadude said...

Zillow is just a tool.Do not rely on it for value.It will give you a rough idea but thats about it.

Sippn said...

Agent bubble, forgot you were an agent - how come they don't treat you like the antichrist? just lucky.

Dug into the spreadsheet. It's not going to get any closer than zip code for Zestimates. ZII is actually a measure of "interest" how many clicks they get per zip code - Davis wins. THe other zip codes, could have been just me cliking.


My favorite zip code, 95864 includes Arden Park - tear downs $399-500K, homes up to $1.5, Arden Oaks - tear downs $800-2 mil, homes up to $5 mil, Arden Manor, homes $200-350K - how does Zillow treat these differently? no evidence it does.

While computers are capable, no programmer has been able to put together the equasion that thinks as complex as the human mind.

I still prefer appraisers.

Gwynster said...

What about the folks in Davis that list 100k over the zestimate? Unfreaking believeable.

Everything in my neighborhood is trending down and has been for over a year. As for interest in Davis? I may account for 50% of the traffic zillow gets in Davis and we all know I'm not buying >; )

Sippn said...

It gets worse, looking at the quarterly data by zip - there are some huge unexplained jumps in values that never correct - 25-45% in first quarter 2005 in Granite bay, Loomis, Newcastle over 100% in a year in 95864 -

Very suspect data. Dig deeper Zillow, there's a flaw in your system!

AgentBubble said...

sippin,

I'm not as naive as a lot of my fellow agents I suppose. I actually have buyers that I've told not to buy right now, so I guess I don't fit the typical realtor mold that is described on this and other blogs. I try and be objective and reasonable, and I think I'm given a pass because of that...;-)

Anu said...

Zillow had the house Im renting in Natomas jump 50K in one day a few months back. The current Zestimate is $450K, while the same model a few blocks over has been on the market for $375K.

rocklin renter said...

Zillow is garbage.

I watched a house sell for 449 retain it's "Zestimate" of 589.

How does that work? A house sells for 449, but it is really worth 589?

Awesome.

Sippn said...

Zillow got trashed today in WSJ, page D1, upper left corner

Zillow Estimate: $661,756
Sold for $2,690,000

pretty close!

lexi said...

Wow, on all the homes I checked
on zillow.. zillow OVERESTIMATED their value by thousands. One
house my friend sold in the summer
of 05 for an all time high for
that neighborhood and the peak
month of August for 480K .. zillow
listed it's worth today at 565K and
there is an exact house only nicer
down the street today for 425K on
short sale. All the homes I searched on zillow were all either
close or way over valued. None were
undervalued. I won't be using zillow for anything except checking
square footage!