Zillow.com, the online real estate site that estimates and tracks the value of more than 70 million homes in the U.S., was like a recreational narcotic when it debuted two years ago. After a busy, perhaps tough day at work, what fun it was for homeowners to plug the Zillow.com address into their computers and see how much the value of their homes had added to their net worth. It was a little like betting on a horse race whose outcome you knew.
Well, that didn't last long. Today, a Zillow search is likely to be pretty much of a downer, an in-your-face reminder that gravity sucks, and what goes up always comes down eventually.
Zillow's "zestimates," the organization's cutesy-poo name for its home valuations, are based on local data and rely substantially on the selling prices of homes by zip code and neighborhood. Tax assessments and official real estate appraisals are also considered in Zillow's proprietary formula. Zillow checks the accuracy of its zestimates against actual sale prices and rates itself on how its assessments measure up. A table at Zillow's site shows how the zestimates performed market by market; Zillow gives itself gold stars depending on their margins of error
In the current market, misery loves company. I feel a little like Lot's wife every time I check my home's value on Zillow, expecting to be stopped in my tracks one of these days by a double-digit loss in value. I can't complain that our home in Connecticut has lost only 1% of its value over the last year, considering the pain others are feeling.
It is, of course, none of my business, but I checked out a Las Vegas friend's zestimate this morning, and she has lost 9% in the last year, not surprising in that horrible market. About the only thing at Zillow that might make her feel a little better is if she searches for condos in Miami. Everything is relative in real estate...unless you were the last one to buy a Miami condo. Then where do you turn?