Wednesday, November 25, 2015

Zany Zillow

The Zillow Zaniness continues.  I have posted twice before on Zillow and their infamous Zestimates.
I have found another Zestimate that defies gravity that I would like to share with you.

The upper line in the chart below is the Zestimate of the subject home as a function of time from about the beginning of 2007 to the present. The lower lines are the prices for homes in the same zip code and the town.  The two latter lines seem to be very closely correlated with each other and are moving in a rational manner.  The green dot with the "S" is placed at the date and value of the last sale of the property in 2010.
Property A, version 1

Below I have listed the sale transactions on this home since 1999:
Date                                  Sale Price
8/10/1999                          $650,000            
4/1/2005                         $1,350,000
9/24/10                              $500,000

Unfortunately, the Zestimate chart does not go back to 2005, but from the best I can figure the Zestimate must have been considerably higher than the actual sale price.  Then, in September, 2010, the home sold for $500,000, yet the Zestimate at the time of the sale was $2,500,000, a full 500% of the sale price.  If that wasn't enough, then by May, 2015, the Zestimate for this home had gone up to $4,000,000.  a full 800% above the price it sold for some 4 1/2 years earlier.  Now, you might think that this home was renovated, or there was an addition or something.  That is not the case.  The home remains the same, except the city removed a tree at the street in front of the home in May, 2015. So, what happened to the Zestimate?  It now has dropped in six months from $4,000,000 to $2,945,000, a full $1,055,000. or about 26.5%. 

Can you give some explanation for this fluctuation in the Zestimate? I can't.

****************update 1/21/16***********************
The Zestimate on the above home has continued to slide. As of today it is $2,657,800. So, we now have the Zestimate dropping by almost another $300,000 in two months.  Total drop of $1,342,200 or a full 1/3 of its value in about eight months.

In another attempt to get a handle on the algorithm that Zillow utilizes to come up with their Zestimates I took my home and made some minor changes to the Home Facts.  I changed the flooring material from hardwood and carpet to hardwood, carpet, and tile. I changed the exterior from stucco to stucco and wood.  The result was a decrease of nearly $200,000 in the Zestimate.  I restored the Home Facts to the original values and the Zestimate dropped another $5,000.  More Zaniness.

******************additional material added 1/21/16****************
I have found another home with Zany Zestimates. Please consider this home.  Here is the Zestimate Chart.

And here is a chart of the activity on this home:

Date                 Zestimate         Listed Price
7/14/14            3,200,000          2,995,000
11/25/14          3,300,000          removed from market
5/1/15              3,500,000          unchanged (off market)
6/1/15              3,100,000          unchanged (off market)
9/14/15            3,200,000          2,850.000
11/1/14            3,200,000          2,850,000
12/8/15            3,500,000          2,895,000
1/20/16            3,730,900          2,895,000
1/21/16            3,746,500          2,895,000
1/24/16            3,759,900          2,895,000
2/7/16              3,837,500          2,895,000
2/14/16            3,895,000          2,895,000

Here we really have the Zestimate gone wild.  We have an unbelievable divergence between the Zestimate and the Listed Price.  Since the Zestimate started above the Listed Price, the Listed Price has dropped, AND the Zestimate has increased substantially.  Does anyone really think the Zestimate has any relationship to the market value of this home?

As of 2/14/16 the Zestimate has risen by $695,000 since 9/14/15.  That is a whopping 22% in exactly 5 months. But even more weird is that now the Zestimate is exactly $1,000,000 ABOVE the Listed Price. That's 34.5% above the asking price. Yeh! Without even looking at this home I am going to guess that it will sell for about $2,637,000.  Let's see what happens.

***************additional material added 6/17/2016***************************

This chart below labeled Property A, version 2 is for the same property as the one labeled Property A, version 1 (the first chart above).  You will note that the only sale is for the same amount, but what zillow has done here is revisionist history.  In the chart above the property peaked at about $4M, but this one now reads less than $3.5M. Note also that the Zestimate in the period from about 2010 to about mid 2012 was hovering just above $2M while the chart above was near or above the $3M level.  I know it is an expensive home, but a 33% drop is a bit much of revisionist history.
What could be in their minds?  This must be a random number generator hoax or something.

Property A, version 2

update as of 11/4/2016

We have an update on this home. Please note in the chart below (same property) that the revisionist history of the Zestimate continues.

Notice that about December, 2015, in the upper chart the Zestimate is clearly below $3M, and in the second chart the value is clearly below $3M !

last modified 11/4/16

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