by Jim the Realtor | Jan 3, 2025 | 2025, Year-End Review, Zillow
The Zillow guesses on local appreciation over the next 12 months have gotten more optimistic.
I added their previous guess from November in paratheses next to the zip codes, and the change in their typical home value over the last 12 months (in green). In 2024, the actual was far better than their guesses!
NW Carlsbad – 92008 (+0.2%)
Last 12 months: +5%
SE Carlsbad – 92009 (+2.4%)
Last 12 months: +6%
NE Carlsbad – 92010 (+0.3%)
Last 12 months: +6%
SW Carlsbad – 92011 (+0.2%)
Last 12 months: +5%
Carmel Valley – 92130 (+0.5%)
Last 12 months: +9%
Del Mar – 92014 (+1.9%)
Last 12 months: +6%
Encinitas – 92024 (+0.2%)
Last 12 months: +4%
La Jolla – 92037 (+1.8%)
Last 12 months: +3%
Rancho Santa Fe – 92067 (+0.4%)
Last 12 months: +6%
by Jim the Realtor | Dec 19, 2024 | Zillow |
Finally there is an article that exposes their inaccuracy, but it doesn’t mention the negative effect on buyers due to the zestimates being adjusted to within a couple of bucks of the list price once a home goes on the market.
But the author does highlight that the zestimates are more than 10% wrong for about a third of all homes!
An excerpt:
By definition, half of homes sell within the median error rate, e.g., within 2.4% of the Zestimate in either direction for on-market homes. But the other half don’t, and Zillow doesn’t offer many details on how bad those misses are. And while the Zestimate is appealing because it attempts to measure what a house is worth even when it’s not for sale, it becomes much more accurate when a house actually hits the market. That’s because it’s leaning on actual humans, not computers, to do a lot of the grunt work.
When somebody lists their house for sale, the Zestimate will adjust to include all the new seller-provided info: new photos, details on recent renovations, and, most importantly, the list price.
The Zestimate keeps adjusting until the house actually sells. At that point, the difference between the sale price and the latest Zestimate is used to calculate the on-market error rate, which, again, is pretty good: In Austin, for instance, a little more than 94% of on-market homes end up selling for within 10% of the last Zestimate before the deal goes through.
But Zillow also keeps a second Zestimate humming in the background, one that never sees the light of day. This version doesn’t factor in the list price — it’s carrying on as if the house never went up for sale at all. Instead, it’s used to calculate the “off-market” error rate. When the house sells, the difference between the final price and this shadow algorithm reveals an error rate that’s much less satisfactory: In Austin, only about 66% of these “off-market Zestimates” come within 10% of the actual sale price. In Atlanta, it’s 65%; Chicago, 58%; Nashville, 63%; Seattle, 69%. At today’s median home price of $420,000, a 10% error would mean a difference of more than $40,000.
Read full article here:
https://www.businessinsider.com/is-my-zestimate-accurate-home-prices-obsession-zillow-algorithm-homeowner-2024-12
by Jim the Realtor | Dec 15, 2024 | Forecasts, Zillow
A more balanced market ahead in San Diego
Rates are in the spotlight again as 2025 approaches. That short-lived dip to two-year lows prompted renewed optimism for home buyers and bumped sales volume, then the rebound in October brought a reminder of unpredictability. Rates are likely to remain volatile throughout next year, say Zillow economists.
Read on for more about rates and four more predictions for 2025.
Housing market activity will pick up, home value growth will cool
“Buying a home in 2024 was surprisingly competitive given how high the affordability hurdle became,” says Zillow Chief Economist Skylar Olsen. “More inventory should shake loose in 2025, giving buyers a bit more room to breathe.”
Expect to see more sales and only a modest 2.6% increase in home value growth in 2025, as the market slowly becomes unstuck. This is mainly because we expect more sellers to list next year. A steadier market could make for simpler pricing conversations with those seller clients.
Some markets are expected to outperform this forecast, such as Hartford, Connecticut (4.2% home value growth), Providence, Rhode Island (3.9% growth), and Miami (3.8% growth).
But markets like New Orleans (-3.8%) and San Francisco (-2.3%) are expected to see declines, while Austin is predicted to have minimal growth (0.4%).
Mortgage rates will remain volatile
Borrowing costs should ease in 2025, but as we saw in 2024, mortgage rates rarely do what’s expected of them. What’s more certain is that buyers should expect plenty of ups and downs throughout the year. Also expect sprints of refinancing — which can present conversation opportunities of their own — during the rate dips.
Buyer’s markets will spread to the Southwest
As of November 2024, a total of 25 major metro areas, mostly in the South and Southeast, were considered buyers markets, according to Zillow’s Market Heat Index. Zillow predicts buyers markets will spread to the Southwest in 2025 as inventory continues to come unstuck in relatively affordable markets.
These buyers markets should see the greatest number of movers, while sellers will feel the heat of competition. But if mortgage rates fall more than expected, it dims the prospect that buyers markets will spread west. A significant mortgage rate dip would bring more buyers back to the market, again tilting negotiating power in favor of sellers.
More Americans will embrace small-home living
The pandemic-era need for more space is coming to an end. In 2025, buyers will increasingly embrace smaller homes as a more sustainable and affordable way to live.
The word “cozy” is appearing in more listings — 35% more in 2024 compared to 2023 — reflecting design trends that have shifted away from spacious open floor plans, toward more contained spaces that save both builders and buyers money.
Get more predictions, data, and economic news at zillow.com/research.
https://www.zillow.com/agent-resources/blog/market-report-predictions-2025/
by Jim the Realtor | Dec 10, 2024 | Boomer Liquidations, Boomers, Zillow
They are saying that in the expensive coastal markets there are fewer empty-nesters, but they base that opinion on the percentages? The San Diego metro of 3.3 million x 13% = 429,000 empty-nesters sounds significant to me!
Some have suggested that empty nest households – those aged 55 and older living with no children with at least two extra bedrooms and in place for at least a decade – could eventually flood the housing market with their homes and help make homes more affordable. However, data indicates that this demographic is unlikely to make a meaningful impact over the coming years, especially in the most expensive markets.
Nationwide, there were roughly 20.9 million of these empty nest households in 2022, up modestly from 20.2 million in 2017.
All else equal, in order for empty nest households to make a meaningful contribution to lowering house prices, their numbers must exceed the number of families that currently need their own housing and those that will want or need homes in the future. In addition, because relative affordability varies so widely across the country, this potential supply of homes would need to be concentrated in markets with the worst housing shortages to make a dent. Unfortunately, this future supply coming from empty-nest households doesn’t line up with the areas of greatest need on the map.
The number of empty nest households does exceed the number of families in need of housing: by 2.6 times.
There were 20.9 million empty nest households in 2022 compared to 8.1 million families living with non-relatives that were likely in need of their own unit, and that surplus has grown over time. From 2017 to 2022, the number of families doubling up — living with non-relatives — grew by 500,821. During that same period, the number of empty nest households increased by 703,892.
The problem: Most empty nest households can be found in already relatively more affordable markets. These are areas where housing is already more available, the rate of doubling up with non-relatives is much lower, and they’re located far from where the crush of current young workers choose to live.
A flood of currently owner-occupied homes hitting the market as their current owners pass away or otherwise vacate their homes will NOT solve housing affordability challenges, especially in high demand housing markets.
A silver tsunami is likely to have a larger impact in regions like Pittsburgh and Cleveland. Younger residents have tended to leave these areas to pursue better job opportunities elsewhere, leaving older generations to make up a larger share of those who remain. Young workers choose to live near productive job centers and on the coasts, areas that have much lower populations of older retired individuals holding back housing supply in the first place.
Among the 50 largest metropolitan areas, Pittsburgh, New Orleans, Detroit, Buffalo, Cleveland were the markets with the largest gap between the potential housing supply from empty nest households and potential demand from younger residents. But these are already relatively more affordable markets with fewer home buying age workers to begin with.
In expensive coastal markets with strong job centers where home buying age workers choose to live — like Austin, Seattle and Denver — there are fewer empty nest households to begin with.
As a result, the impact of a future increase in supply coming from the existing housing stock owned by older individuals would likely have a smaller impact on affordability in expensive high demand coastal markets. Without the promise of remote work or investments that improve work prospects and raise the desirability of Midwest markets, it is unlikely that we will see a big shift in migration patterns towards markets full of empty nesters.
Rather, the fix for affordability challenges remains a strong supply expansion coming from newly built homes. Zillow research shows that housing shortages were the most severe in markets with more land use restrictions. In addition to promoting denser construction, removing barriers to homeownership that aren’t related to income — credit assistance programs, down payment assistance or help with closing costs, for example — would likely improve access to homeownership.
https://www.zillow.com/research/empty-nesters-affordability-34636/
by Jim the Realtor | Nov 22, 2024 | Jim's Take on the Market, Zillow |
Oh geez, here we go again.
The number of Zillow views DECLINED since yesterday.
How do the views go backwards?
We already know that Zillow recalibrates their zestimates to within 1% of the list price once a home is listed on the MLS, rendering their posted guesses of a home’s value as completely useless on active listings. They also re-jigger the entire zestimate history too, in a blatant attempt to appease the listing agents.
Now they are tinkering with the view counts too?
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Redfin is a lying scumbag too. This was their guess on Wednesday:
Now look at their bogus claim, just two days later:
Get Good Help!
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Follow up – this is the Saturday version, three days after the listing hit the MLS. But by now I don’t know who or what to believe, if anything. It like learning about Santa Claus!
by Jim the Realtor | Nov 20, 2024 | Jim's Take on the Market, Zillow
It was in May that Zillow started guessing +1%-ish for local appreciation. Comparing their ‘typical home values’ from May to today shows a decline of roughly 2% in pricing in all zip codes over the last six months.
With sticky mortgage rates and a political circus for the ages, I’ll take it!
I’ll guess that we will get +5% in the first quarter of 2025, then back to Flat City.
NW Carlsbad – 92008
SE Carlsbad – 92009
NE Carlsbad – 92010
SW Carlsbad – 92011
Carmel Valley – 92130
Del Mar – 92014
Encinitas – 92024
La Jolla – 92037
Rancho Santa Fe – 92067
by Jim the Realtor | Oct 25, 2024 | Zillow |
There has been a lot of discussion recently about the outrageous cost of fire insurance, and how the FHSZ has been expanded to include major portions of regular suburban towns like Carlsbad.
The buyer of our Circulo Sequoia listing will be forced to pay a premium for fire insurance now, even though the house is in the middle of the tract and doesn’t back to open space – just because the FHSZ box is checked ‘yes’ (above).
Hat tip to ‘just some guy’ for noting that Zillow now has climate-risk factors on some of their for-sale listings. Here is their report on my current listing in Carlsbad:
If the chances are between zero and 2.2% over the next 30 years, wouldn’t you think the insurance industry could find a way to take a little less? (new premiums are roughly double what they were).
The 41 large wildfires within 20 miles since 1984? I’d like to dispute that number (maybe 10?) and fires that are 20 miles away shouldn’t matter to a suburban tract house owner and their insurance company!
by Jim the Realtor | Sep 12, 2024 | Market Conditions, Why You Should List With Jim, Zillow |
Borrowing this from Rob’s blog, this is known as Amara’s Law in technology spheres.
It goes:
“We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”
When the zestimates first came out in 2006, their accuracy was really bad – wrong by 10% to 20% – and those of us in the business laughed them off as a joke. The idea of being able to find out the value of a home with one click was inticing though, so Zillow kept throwing millions of dollars into the project.
They found out that putting a value on a home isn’t so easy, and they still state today that their zestimates have a median error rate of 7.49% – which on a $3 million home is +/- $224,700!
From wiki:
While factors contributing to estimates are described elsewhere, Zillow seemingly overemphasizes home square footage as the major metric driving property valuation. This method may not be unique to Zillow, but unduly distorts value expectations. Listings in areas where land is priced at high premiums often reflect an identical Zillow estimate to that of nearby homes with comparable interior square footage, but where the home might be decades older. Condition, age of home, special features, and proximity to nuisances are insufficiently factored into the estimate. Zillow has made some effort to add balance by including an option for owners to provide their own value estimate, but these figures can be similarly unreliable as being opinion instead of quantifiable.
But homeowners have come to adore their zestimate.
Why? Because it’s been around so long, they believe it to be true.
I had a potential seller tell me last week that their zestimate was how much she could sell her house for. Not that it was the approximate value within +/-7% of being correct, and just a starting point. She believed it was going to be her sales price!
It wasn’t a problem during the frenzy because in the 2020-2022 period you could put any price on a home and it would sell. The homeowners were pleasantly surprised at the extra bonus above their zestimate, and didn’t complain.
But it is different now.
I’ve heard it twice in the last week from two different agents that their price is “right in there”, suggesting that they have evidence of their price being right and just get my buyer to pay it. But there they sit, unsold.
Having a zestimate, or having cherry-picked comps to support today’s list price is precarious – it ignores the current market conditions, which are squishy to say the least. The premium, fixed-up, and staged homes are selling briskly, and the others are sitting.
But because the zestimate has been around so long, people believe it must be right. Sellers certainly don’t want to take less! Include 1-2 older sales and sellers and listing agents want to believe the mythical nuclear buyers with 2.2 kids are right around the corner.
Get Good Help!
by Jim the Realtor | Sep 2, 2024 | Forecasts, Zillow
Since May, Zillow has been predicting virtually no annual appreciation locally. Living in Flat City mostly affects those who have purchased recently – it’s tougher to move and/or refinance if the down payment was 20% or less. If you just want to lower your existing rate, ask your lender about a streamline refinance. Those don’t require an appraisal.
Carlsbad NW 92008
Carlsbad SE – 92009
Carlsbad NE – 92010
Carlsbad SW – 92011
Carmel Valley – 92130
Del Mar – 92014
Encinitas – 92024
La Jolla – 92037
Rancho Santa Fe – 92067
by Jim the Realtor | Aug 7, 2024 | Forecasts, Zillow
Living in Flat City can be a disaster for those recent purchasers who buy the wrong house, or get divorced. If you have to resell your home in a year or two after buying it, the down payment will get eaten up and you may not be able to buy another house….unless you leave town.
NW Carlsbad – 92008
SE Carlsbad – 92009
NE Carlsbad – 92010
SW Carlsbad – 92011
Carmel Valley – 92130
Del Mar – 92014
Encinitas – 92024
La Jolla – 92037
Rancho Santa Fe – 92067
