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How Good is Zillow?

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We like the Zillow site at Townsend Appraisals.  It has some good charts for seeing how the market is doing. It has a lot of houses listed and their prices both current and recent past. School districts are listed, taxes on sales, contacts with agents, lots of information. The Bird’s Eye view below shows a recent listing.

Zillow Values

Zillow Maps

One of the common uses of  Zillow is to provide an estimate of the value for your property.    Of course we are left with the question. How good is the estimate?

In a recent article in The Appraisal Journal, a monthly publication  by the Appraisal Institute, that question was explored.   The article, ” Zillow’s Estimates of Single-Family Housing Values” by  Danile R Hollas, PhD, Ronald C. Rutherford, PhD, and Thomas A Thomson, PhD explored the issue.   The article compared the actual sale values of 2045 single family properties sold in Arlington, Texas with the sale values.  It was done at a time when the market there was stable, and  where Zillow indicated it data has the highest accuracy rating. So how did Zillow do?

Zillow generally overestimated the values.  In over 40% of the  properties, the over estimate exceeded 10% of the value and only .88% of the property values were underestimated by 10% or more.    We think this is good to know.  We wonder how many homeowners have already checked out Zillow’s estimate of value before we see their homes.   If they have, it looks like they may think we are appraising their properties too low.

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North & East Richmond Showing Signs of Improvement

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It has been a difficult time in North & East Richmond since 2006.  At the end of 2010  the market  hit rock bottom.

Market Trend N&E Richmond

Market Trend N&E Richmond

During the steep downturn, more and more houses went under water and ultimately  all sales were  foreclosures and short sales.  Most homes were purchased by investors who typically fixed up the properties for rent or for resale at a higher prices.    In 2011 the market started to turn around.  Gradually the number of distressed sales dropped and today the majority of sales are normal sales.  However, you can see by the chart that the prices are still well below the highs of 2006. In fact values on a dollar per square foot ($/sf) basis are less than half of what they were then.

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El Cerrito Market Trend

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The chart displayed is a regression analysis of sales in El Cerrito since 2006.  The sales data is expressed in $/sq ft of the houses living area.

 

El Cerrito08212013045326

Values in El Cerrito  started dropping in early 2007.  It took until early 2012 for  prices to stabilize.     During 2010 the percentage of distressed sales was 20% compared to 4% today.   The prices are still not up to what they were in 2006-  about 10% lower, but the market is continuing to improve including both number of sales and sales prices.

 

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What to Expect at Your Appraisal Appointment

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After we say hello, we measure the exterior of your home and draw a diagram of the exterior walls.  We photograph the front, rear and street scene of your home, and possibly other amenities such as a view, pool, decking, patio, landscaping, etc.

Once inside, we measure the garage (if it is attached) and indicate where rooms are located on the diagram we have drawn.  Typically, we do not measure interior walls.  We do take interior photographs, primarily of the the living room, kitchen, baths, and may take a photograph of every room in the house.

We note the following: flooring materials used throughout, tub/shower surround materials, any significant deferred maintenance (ceiling leaks, very old roofs, torn carpet, etc.)  We will ask you if there is anything you would like to tell us about your home.

A typical appointment takes between 15 – 45 minutes, depending on the complexity of your house.

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Market Turn Around in Rodeo?

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We have been appraising in Rodeo since Nancy first got started in the appraisal business more than 22 years ago.   Rodeo is a particularly dynamic market and very sensitive to the overall forces affecting real estate.  Accordingly, during the up years it rose quickly and  in autumn of 2006, it sank like a stone.

The chart at the right gives you an idea of what I am talking about.  It starts  at the beginning of 2006.  I have plotted the dollars per square foot of  gross living area  of the houses  in Old Rodeo as it changed with time.  The all-time high of $400/sq ft  occurred around mid-summer in 2006 and began to drop rapidly  in the fall.  It continued to plunge downward until around August 2009, where it settled at around $125/sq ft. That was a 69% drop in value! At this point in time we  see the market start to pick up.

Almost all the local sales are foreclosures or short sales. In 2009, there were 67 sales,  50 of which were foreclosures (REOs) and 7 of which were short sales.

Home prices are being set by these distressed sales and this may continue for some time. Nevertheless, it looks like at this point we may have hit bottom as far as prices go.  It may be a good time to buy!

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New Hope for Underwater Homeowners

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We are all hearing  about banks helping — or not helping —  folks having trouble paying their mortgage payments. In many cases, the people that are being helped, 40 or 50% of them, default on their loans a few months after  the loan was restructured.

Underwater in East BayRestructuring almost always  extends the term of the loan or reduces the interest temporarily.  Seldom is the principal of the loan reduced.

This may change. Owners  that are under water, that is they owe more than their homes  are worth, which  here in California are about 1/3 (and in neighboring Nevada is 2/3!), have little incentive to make their payments  or take care of their homes.  Lets face it, they feel more like renters than owners.  So some banks, Wells Fargo, for instance, are reducing the principle owed or deferring payment of the principle.  In the case of  a principle reduction, some of the loan is forgiven.  In the case of deferment a  part of the principle  is deferred until the time when the owner sells the house, at which time he has to pay back the amount of principle  that was deferred.  Either way, the owner is more  motivated to stay put and continue making payments, now at a reduced level. We are hoping it works.  An agent recently told us she knew 6 people living in El Cerrito or nearby communities that hadn’t made payments in over a year but had not been foreclosed upon.  We suspect there are a lot of people out there like that which means foreclosures may increase and extend over a lot longer time.   Let’s hope effective action of some kind can be taken.

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