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  1. #1
    drala is offline Senior Member
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    Default Zillow and falling housing value

    Has anyone been checking out Zillow for the supposed value of their house in last 6 months? I live in Fairmount, a neighborhood that seems to be thriving lately -- and my reported home value has plummeted. WTF. The only good news I can see is that hopefully my home appraisal for tax purposes will happen now.
    Last edited by drala; 04-22-2012 at 07:08 PM.

  2. #2
    gren's Avatar
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    Data Coverage and Zestimate Accuracy - Zillow

    That's their self assessment. Note that in the Philadelphia Metro when houses sell 31.6% zestimates are within 5% of actual sale price, 53.3% within 10% and 74.7% within 20%. The median margin of error is 9.1%. My guess would also be that it's generally easier to guess suburban prices than urban ones which I would imagine city zestimates are less likely to attain those numbers, especially for high value areas close to low value areas. I don't know exactly what is causing the fluctuations in Zestimate--although I imagine it's citywide data and not neighborhood data--but I don't think you should worry that a change of tens of thousands in the zestimate really says all that much about the value of your house.

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    Quote Originally Posted by drala View Post
    Has anyone been checking out Zillow for the supposed value of their house in last 6 months? I live in Fairmount, a neighborhood that seems to be thriving lately -- and my reported home value has plummeted. WTF. The only good news I can see is that hopefully my home appraisal for tax purposes will happen now.
    Maybe my friend is to blame. She just bought a house in Fairmount. The previous owner took a 45k loss on it after owning it for five years.

  4. #4
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    Zestimates are a nice tool of information, but like anything else, is just a tool that is not perfect. Gren stated well Zillow's own disclaimer of accuracy. In areas like Fairmount, where there are still distressed properties sold such as shells and being that it borders Brewerytown, Zillow could easily be pulling properties into the calculations due to the fact that they are so close and of course pulling in the shells and the properties that need work. There are so many streets in every neighborhood in Philadelphia in that once we cross them prices start to change. Zillow does not take into account for that. For example, Zillow will not take into account a property on one side or the other of Washington Ave. Or up and down 5th Street in Northern Liberties or Pennsport. Hope that helps - feel better : )

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    eldondre is offline Moderator
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    Quote Originally Posted by drala View Post
    Has anyone been checking out Zillow for the supposed value of their house in last 6 months? I live in Fairmount, a neighborhood that seems to be thriving lately -- and my reported home value has plummeted. WTF. The only good news I can see is that hopefully my home appraisal for tax purposes will happen now.
    home value and neighborhood vitality are not the same thing. I've noticed lower listings (not low enough for me) even in fairmount proper compared to the boom years. certainly brewerytown has plummeted which is largely a good thing, imo, as it needs to be priced so it's worth the gamble to move there and improve it.
    "It has shown me that everything is illuminated in the light of the past"
    Jonathan Safran Foer

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    seand is offline Senior Member
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    Before the crash in 2008 and for a few months after I was looking closely at zestimates and I felt they were wildly inflated in Philly - maybe 20% - 25%.

    After the crash, they totally redid their formulas and zestimates dropped to maybe 15% too low. Since then every few months they seem to arbitrarily jump one way or the other not reflecting actual sales but revisions to the mathemetic formulas they use. I think the issue in particular is adjusting their formula to the number of bank foreclosures on the market in urban areas, where a geographic shift of a block or two can be significant. I think bank foreclosures has wreaked havoc on their averaging formula and fine tuning that to a city like Philadelphia has been problematic. Especially as opposed to the suburbs where there is often a lot more homogeneity in housing stock and demand within say a whole zip code than there is in Philadelphia.

    I wouldn't take it too serious, in another six months they will jump the other way.

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    Agree with everything above, and that Zestimate struggles in dense, urban neighborhoods. I just checked my own house out, and it's almost 100k too low. That can happen when a block is a mix of 1. recently renovated, new homes, 2. older, run down homes, and almost nothing in between.

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    JakeL is offline Senior Member
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    I'm on the flip side of this, with a crazy high valuation. I'm in Brewerytown and the Zestimate estimated my house is worth 68% more than what I bought it for a year ago. Looking at the comps, it's pulling several of them from the other side of Girard, skewing the prices.

  9. #9
    John Goodman is offline Senior Member
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    zestimate means absolutely nothing

    no reason to pay attention to it at all

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    LUCas is offline Senior Member
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    Quote Originally Posted by John Goodman View Post
    zestimate means absolutely nothing

    no reason to pay attention to it at all
    ^^^ This.

    According to Zillow, my house has been worth 50% more than I paid for it and 50% less. Within the past 5 years. The market is screwy, but not that screwy.
    "I am a <banned> liar." -Mr.Brightside

  11. #11
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    Yeah, my house in Fishtown had a zestimate of $185K when I sold it easily for $270K. It somehow has my Germantown house close to value but I'm going to guess the new HVAC system and electrical will have more value to my house than one down the block selling for $400K+. Basically, there's going to be no Mathematical tool that replaces the value of a real estate agent who can determine market value of your home by looking at the most comparable sales in the past 6 months.
    Licensed Pennsylvania Real Estate Salesperson and inactive and happily non-practicing Attorney, CITYSPACE
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    Philadelphia is still heavily inflated from where the housing bubble will ultimately deflate. People who think otherwise are in serious denial. Along with the fact that the amount of housing subsidization (i.e., abatements) in this town will deflate values even further when that runs out, along with the coming AVI property reassessments.
    Last edited by phillyTIM; 04-27-2012 at 02:21 PM.

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    I do not think that real estate taxes will drive the market although it will have an impact. The bigger point is that rents are escalating and continue to where in many neighborhoods in the City the cost to rent exceeds the cost of homeownership and in some cases, the spread is amazing and even more so in terms of the product of the house or condo that you can live in. As this continues, the reversal of the real estate market begins with a large pent-up demand of purchasing power. It is already starting to happen. Most properties that are priced well that are good products are receiving multiple offers with low days on market. The inventory of what is available in the likes of Graduate Hospital, Bella Vista, Pennsport, Northern Liberties and Fishtown is low (properties that are priced right and show well). It is disappointing that with the economic recovery underway, our local real estate market will face a real estate tax hike and some neighborhoods will be hit pretty hard, but I think that is a headwind that looking back, will be dealt with as there are too many other fundamental positives that are laying the groundwork. I am a buyer myself. ~ Chris (with rents sky high, it is a no-brainer, buying one in Fishtown in May)

  14. #14
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    No kidding--the rents are seriously painful now. When people call me who have been in an apartment for a few years and want something for $1K, I realize they're going to get a rude awakening. There are still deals to be had out there in the rental market, but most landlords have definitely driven up prices and get to choose from tenants with perfect credit so sometimes it's easier to qualify for an FHA mortgage than an apartment.

    I'm interested to see how the tax increase will play out.
    Licensed Pennsylvania Real Estate Salesperson and inactive and happily non-practicing Attorney, CITYSPACE
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  15. #15
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    It will be very interesting how the the tax increase will play out Brooke and even more interesting on how we get there from a political perspective.

    It is already May and the City is behind in the process of coming up with the property values. In addition, there are many Council members who do not support the Mayor on this and are suggesting that the whole process be pushed back which could be a detriment to the PSD. They will not support an increase in real estate taxes until they know the PSD has a definied plan which is admirable (imagine that). How will the Mayor gain the support of City Council? Where does Councilman Clarke stand? Will the PSD find another funding source (doubtful) ?

    And then when the new taxes do come, there will be outrage. Some buyers might put off their decision as their buying power will go down. But getting back to those sky-high rents, landlords will probably pass on the cost of higher real estate taxes again to renters with even higher rents??? Time will tell...

  16. #16
    billy ross is offline Senior Member
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    Quote Originally Posted by phillyTIM View Post
    Philadelphia is still heavily inflated from where the housing bubble will ultimately deflate. People who think otherwise are in serious denial. Along with the fact that the amount of housing subsidization (i.e., abatements) in this town will deflate values even further when that runs out, along with the coming AVI property reassessments.
    If I had to bet between the value of the dollar and the value of tangible assets like Real Estate, in Philly or otherwise, and in an era of quantitative easing no less, I'd go with the tangible asset any day of the week. Are you on dust? Paper money is fiat currency. Destroy its value and the value of anything tangible, including real estate, jumps. That's the world we're in. Just about any smart person you talk to sees inflation (dollar-wise, at least) around the corner. Haven't you seen the dollar dropping against the Chinese currency? The yen? The euro was founded at par with the dollar. No more. Precious little is propping up the value of the dollar right now. That is, the willingness of the Chinese and Japanese to lend to us. How long will that go on? How are we going to pay them back? I'm very bearish on the dollar right now.
    Last edited by billy ross; 04-28-2012 at 11:06 PM.

  17. #17
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    Zestimates are mostly useless. The only info it has about your house is what's available in public records. It doesn't know whether it's a shell, or a grandmom house or a high quality rehab.

    With that said, in 2011 every part of the city except south and west philly experienced price declines. As of the 4th quarter of 2011 fairmount saw a modest uptick in house prices but not enough to sway your home value by any meaningful amount. First quarter 2012 numbers should be available soon and that will be interesting. Banks have finally started flooding the market with foreclosures again. Although Fairmount has a low rate of foreclosures, the excess inventory should exert negative pressure on house prices citywide.

  18. #18
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    Quote Originally Posted by thesomersteam View Post
    Zestimates are a nice tool of information, but like anything else, is just a tool that is not perfect. Gren stated well Zillow's own disclaimer of accuracy. In areas like Fairmount, where there are still distressed properties sold such as shells and being that it borders Brewerytown[...]
    Not only Brewerytown, but also Francisville.

    As for the effect of tax abatements, our own raider.adam noted in a reply to an earlier post on our blog that buyers apparently pay more for a house with an abatement than for one without - so in effect the abatement is a subsidy to the builder more than a savings to the buyer. (It could be that as well if the price premium is less than the amount of taxes foregone over the next 10 years.)
    Sandy Smith, Wanderer in Germantown, Philadelphia
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  19. #19
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    Quote Originally Posted by the mule View Post
    Zestimates are mostly useless. The only info it has about your house is what's available in public records. It doesn't know whether it's a shell, or a grandmom house or a high quality rehab.

    With that said, in 2011 every part of the city except south and west philly experienced price declines. As of the 4th quarter of 2011 fairmount saw a modest uptick in house prices but not enough to sway your home value by any meaningful amount. First quarter 2012 numbers should be available soon and that will be interesting. Banks have finally started flooding the market with foreclosures again. Although Fairmount has a low rate of foreclosures, the excess inventory should exert negative pressure on house prices citywide.
    Here in Kensington we have groups who are very active in seeking out working class who are hit with foreclosure. The mod rate for those who respond is 2/3 thereabouts. That's not stopping new stock from going up in price.


    We do need a Homestead Exemption though for everyone 60+. The number of people able to get work at that age is terrible in Pennsylvania. We shouldn't punish those who have been productive and contributive all their lives to reward them with completely unaffordable taxes that will create new vacancy faster than we can replace that vacancy. Besides, these people are the ones who rode the neighborhood all the way to the bottom. They deserve to live to see it rise back up.

  20. #20
    Cro Burnham is offline Senior Member
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    Quote Originally Posted by MarketStEl View Post
    buyers apparently pay more for a house with an abatement than for one without - so in effect the abatement is a subsidy to the builder more than a savings to the buyer.
    Regardless of who gets the subsidy, if a house is worth morewith an abatement, then it is worth less without an abatement. This is two sides of the saMe coin. So if the taxes go up or the abatement goes away, the house is worth less, and a buyer will pay less for it, approximately by the value of the present value of the tax increase.

    Existing owners of underutilized property gained the most from the abatement by being able to sell the property to developers at a higher price that would still enable the developer to earn a market return on the development. Had the city crafted the abatement in a less simplistic manner, more efficient, it would have been able to capture more tax revenue and the same amount of development - the losers would have been property speculstprs (not necessarily developers) who would have had to sell underutilized properties at lower values that did not reflect the added value of potential future abatements. As it is, many sleazy lanf or shell owners received a bit of a windfall because of the simplistic way in which the abatement was structured.

    Overall, the abatement has been a great success, but it could have been somewhat better with a little tweaking to prevent significant benefit from passing to speculators.

 

 

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