Our regular commenter elbarcosr backed me up on how wacky the zestimates have been lately. They seem to be getting worse, which is hard to believe.
Being a Zillow homer now, I thought I better look into it.
Let’s serve up a nice big softball. Certainly the zestimates have to be accurate on recently-sold homes, don’t they? We saw how Redfin’s evaluator can cozy up close to a recent list or sales price, and you can’t blame them. After a few years, the database would look pretty consistent.
Does Zillow do the same? Wouldn’t it make sense to have your algorithm compute a recent sales price into the property’s zestimate? Because if you did, it would also help value the nearby homes that haven’t sold recently – because that’s how everyone would value them.
Evaluations in unique, non-tract areas is tougher. But if we are just looking at recently-sold properties, and their zestimates – the uniqueness shouldn’t matter as much!
I looked at 28 homes sold in La Jolla, Del Mar, and Rancho Santa Fe that closed between $2,000,000 and $3,000,000 in 4Q15, and compared their sales price (the definition of value) to their zestimates.
The average margin of error was 16%, and after removing the four that were wrong by more than $1,000,000, the average error was still 12%.
These are houses recently sold, and their sales price defines the actual value!
Even though the $2,000,000 to $3,000,000 range is the lower end for those areas and there are plenty of comps to help pin-point a zestimate, let’s consider an easier target.
Carmel Valley should be the hotbed of zestimate accuracy, especially when we look at the low-end where every data point is a pure tract house.
There were 57 CV sales in the fourth quarter between $1,000,000 and $2,000,000 that were considered.
The average margin of error was 3.6%, which is probably acceptable. But if it was any higher, there would be concerns – these are tract houses that just sold in 4Q15, and have a long history of steady comps around them!
The only zestimates that might be close are in pure tract neighborhoods.
Disregard all others.