TheTucsonFoothills

seller gets zillowed

Last week I posted a story about Zillow.com & Reply.com, the new and newest web based real estate valuation services - new ways to value your home, and your neighbors.
I thought this would be a good time to compare the two services, and pit them against what are real world values for recent home sales in the Foothills area of Tucson AZ.
Well it's happened, someone got zillowed.
'A home seller tells RealtyTimes he is contemplating contacting an attorney over losing a sale he blames on Zillow's estimate of his home.'

Dear Blanche:
I read your article about Zillow.com and would like see your advice on my situation. We started selling our house but potential buyers showed us a Zillow.com price estimation for our house and told us that our selling price was not realistic. As a result of this we had to...

See full story Including the excellent response from RealtyTimes columnist Blanche Evans- ...'new companies posting public housing data have immunity from the responsibility of potentially harming individuals.'
In my post last week I concluded that, at this point these are interesting, innovative services that are fun to play around with, and that may be useful in providing a broad value range. But I also think that Zillow and Reply should back off on the claims they each make on their homepages; or at the very least provide a big warning on the homepage that advises people that these valuations cannot be counted on to be accurate - Do Not make financial decisions based on them. It's too important!
Let's get the word out, before more people fall for this.

Real Estate USA, today

Each month I participate in a real estate survey conducted by Bank of Americas Equity Research Department.
The purpose of this research is to provide "analysis of the latest trends in the largest real estate markets, thoughts on where we see markets' heading in the near term, and our favorite and least favorite homebuilding stock ideas." In this survey Bank of America polls '4,000 agents in 39 of the largest housing markets'.
"We survey real estate agents, as we believe that agents will provide an accurate assessment of housing market trends in both the new and existing home markets. Even though homebuilders sell new homes, we believe that it is crucial to have anunderstanding of the existing home market as the existing home market is substantially larger than the new home market (approximately 85%/15%) and trends in the existing home market dictate trends in the new home market."

I have omitted any reference to individual homebuilding stocks, and instead offer the results of this survey, in a summarized form, as a snapshot of current real estate trends in these 39 markets as reported by the 4000 real estate agents taking part in the survey.
BofA Monthly Real Estate Agent Survey

Home for Sale, by Anxious Owner

The N.Y Times reports "...home prices may now be falling, despite what the official numbers show, many economists say."
"Home sales are falling rapidly, and the number of houses on the market is surging. Yet each new economic report offering evidence of a housing slowdown also shows that the national median home price has continued to rise over the last year."
"To understand how this could be happening, consider a three-bedroom house surrounded by oak and redwood trees, not far from the Golden Gate Bridge, in San Rafael, Calif. Reluctant to cut the price from its current listing of $1.54 million, its owners are instead offering a weeklong vacation time-share, every year for life, worth about $10,000, or an equal amount toward lease of a car."
Read Complete Story

The Latest - Tucson Foothills Sales Activity 8/27

Here's the broad picture of sales activity - from the Tucson Assoc of Realtors MLS, for single family homes in the Tucson Foothills,during the past two weeks, that's 8/14 thru 8/27.
This activity took place against a base of 356 homes currently listed for sale (priced from $225,000 - $22,000,000) yes $22 million!
New Listings = 51 (priced from $245,000- $3,200,000)
Homes gone under contract = 28 (priced from $259,500 - $3,400,000)
Homes Sold = 18 (priced $283,000 - $1,300,000)
Price Reductions = 42
Price Increases = 4
Expired Listings = 13
Withdrawn Listings = 20

These results are kind of a mixed bag as compared to the previous two weeks (see The Latest - Tucson Foothills Sales Activity 8/13)
Compared to the previous 2 weeks, in the current 2 week period-
We've had 4 fewer New Listings, 7 more homes going under contract, but 19 fewer homes SOLD.
7 more price reductions and 3 more price increases, 1 more expired listing and 9 fewer withdrawn listings.
The previous 2 week period showed impoved sales activity and I was hoping that that would continue and we might begin to see a trend emerging. Though the good news is that we've had 7 more homes going under contract, the not-so-good news is that 19 fewer home SOLD. So again a mixed bag.
Til' next time.

new ways to value your home, and your neighbors

This week Reply.com debuted with it's new real estate web valuation service, providing some fresh competition for Zillow.com.
Reply.com (beta) – Your Decision Engine
Everything you need to know about nearly every Home and Auto in America.
vs.
Zillow.com - Your Edge in Real Estate
Free, Instant Valuations and Data for 67,000,000+ Homes
I thought this would be a good time to compare the two services, and pit them against what are real world values for recent home sales in the Foothills area of Tucson AZ. This is where I live and work, so I'm very familiar with what goes on here.
I chose a total of 6 homes from the Tucson MLS that have sold in the last 3 weeks, 3 months and 6 months in a price range from about $500k to just over $1mil. I also chose homes that I am familiar with, homes that I have seen and shown to clients or at least previewed on my own in the past. I did this because I wanted to avoid picking a home that was for some reason odd, really unique or extroadinary, and therefore not representative of homes in that area.
I entered those addresses in zillow & reply, and I did not make any adjustments to the zestimates or valuations provided by Zillow or Reply for these homes.
Here's what I found,
--------------------------------------------------------------------------

1. 2149 CAMINO LA ZORRELA Tucson, AZ 85718

Zillow = $609,993
Value Range: $536,794 - $847,890
The Value Range indicates how much data we have for a home. The smaller the range, the more data we have, and the more accurate the Zestimate.
vs.
Reply.com = $677,625
Confidence = 94%
Reply! Confidence Rating is a complex proprietary calculation that is used to determine the accuracy of the latest Reply! Home Valuation that we have calculated. Since there are so many variables that go into producing a home valuation, Reply! provides this confidence rating for the purpose of providing transparancey to the consumer around how accurate a particular valuation is. For example, a home that has an abundance of comparable homes sales with accurate and up-to-date home detail information will score a higher Confidence Rating than would a home that had less comparables with less home detail information.
vs.
Tucson Association of Realtors MLS = $ 807,000
This home SOLD about 3 weeks ago for $ 807,000 thru the Tucson Assoc. of Realtors MLS

2. 4565 N Quartz Hill Pl, Catalina Foothills, AZ 85750

Zillow = $1,042,825
Value Range: $917,686 - $1,449,527
VS.
Reply.com = $1,319,532
Confidence = 92%
VS.
Tucson Association of Realtors MLS = $1,025,000
This home SOLD about 3 months ago for $1,025,000 thru the Tucson Assoc. of Realtors MLS

3. 5261 N Calle Oreo, Catalina Foothills, AZ 85718

Zillow = $ 945,888
Value Range: $832,381 - $1,314,784
VS.
Reply.com = $1,192,036
Confidence = 93%
VS.
Tucson Association of Realtors MLS = $825,000
This home SOLD about 6 months ago for $825,000 thru the Tucson Assoc. of Realtors MLS

4. 5410 N Via Velazquez, Catalina Foothills, AZ 85750

Zillow = $ 679,879
Value Range: $ 598,294 - $945,032
VS.
Reply.com = $635,611
Confidence = 94%
VS.
Tucson Association of Realtors MLS = $570,000
This home SOLD about 6 months ago for $570,000 thru the Tucson Assoc. of Realtors MLS

5. 1916 E Miraval Cuarto Tucson, AZ 85718

Zillow = $ 598,299
Value Range: $ 526,503 - $831,636
VS.
Reply.com = $ 527,133
Confidence = 95%
VS.
Tucson Association of Realtors MLS = $589,700
This home SOLD about 3 months ago for $589,700 thru the Tucson Assoc. of Realtors MLS

6. 5140 N Via Entrada, Catalina Foothills, AZ 85718

Zillow = $ 587,912
Value Range: $ 517,363 - $817,198
VS.
Reply.com = $ No Valuation
Confidence = Under 85% Confidence
VS.
Tucson Association of Realtors MLS = $494,000
This home SOLD about 3 months ago for $494,000 thru the Tucson Assoc. of Realtors MLS

I thought this would be an easy test since all of these homes have sold recently and the sales data is publicly available. But despite that both zillow and reply are pretty far off the mark in their valuations.
The zillow value range in most cases seems to at least book-end the real world price, albeit by a very wide margin.
One other factor here is that these homes are not in a cozy little subdivision of similiar homes of about the same size, of similiar vintage or amenities, and they're not on cookie-cutter lots.
These are all in areas of the Foothills where the homes are more or less custom, they cover a pretty broad age range, and the lots are not cookie-cutter. So it's a lot tougher to pull a value just based on a bunch of data.
But they both claim that they can do it.

And even if we were to consider homes that are more comparable in terms of size, age, amenities and lot size, how does the data that they count on account for condition, improvements, upgrades, how well a home shows and all the other factors that help determine value.
In any case I think that at this point these are interesting, innovative services that are fun to play around with, and that may be useful in providing a broad value range. But I also think that Zillow and Reply should back off on the claims they each make on their homepages;

Zillow.com - Your Edge in Real Estate
Free, Instant Valuations and Data for 67,000,000+ Homes
Reply.com (beta) – Your Decision Engine
Everything you need to know about nearly every Home and Auto in America

or at the very least provide a big warning on the homepage that advises people that these valuations cannot be counted on to be accurate - Do Not make financial decisions based on them. It's too important!
I'm sure that's buried somewhere in the small print, but who reads that stuff.

Home sales to rebound in August,

A story from Reuters, NEW YORK, Aug 24 (Reuters) reports;

'Hitwise, which tracks Internet searches of 10 million users, predicted that a 42 percent increase in search volume for the term "homes for sale" this month will correspond to a jump in actual sales.
The correlation works because Web searches for "homes for sale" are directly related to home purchases, Tancer said. The predictive value occurs because consumers likely search the Internet for houses two weeks to a month before making a transaction, while the NAR needs three weeks to compile and release its data, he said.'

I hope this is true. It should be such an obvious indicator of what's to come, so obvious that it never occurred to me.
Increased searches for something indicate more interest in that something, which should translate to more sales of that something.
But before I get all excited about this, a couple of things occurr to me in response to this prediction.
Could it be that all the publicity that's been given to the decline of home sales in the media recently has led to a corresponding increase in just curiosity by consumers? Could it be that people want to find out more about what all the brouhaha is about?
And contrary to what Mr Tancer says, " ...consumers likely search the Internet for houses two weeks to a month before making a transaction"- all the data that I've seen + my personal experience indicates that consumers using the internet to search for homes have a much longer lead time between searching and purchasing.
More like two to six months.
And by the way, August is almost over.
Read the full article here.

oui!

July 2006 Residential Home Sales Stats,
From the Tucson Association of Realtors Multiple Listing Service.

Home Sales Volume: Decreased 18.54% from $412,305,542 in July 2005, to $335,850,770 in July 2006.
Home Sales Units: Decreased 22.54% from 1,584 units sold in July 2005 to 1,227 units sold in July 2006.
Average Sale Price (all residential types): Increased 5.16% from $260,294 in July 2005 to $273,717 in July
2006.
Median Sale Price (the price at which half the homes were sold above and half below): Increased 2.27% from
$220,000 in July 2005 to $225,000 in July 2006.
Average Days on the Market: Increased 88.46% from 26 days in July 2005 to 49 days in July 2006.
Pending contracts (transactions subject to contract but not yet closed escrow): Decreased 46.30% from 2,028
in July 2005 to 1,089 in July 2006.
Active Listings: Increased 120.46% from 4,062 in July 2005 to 8,955
in July 2006.
New Listings: Increased 34.47% from the 2,132 listings added in July
2005 to the 2,867 listings added in July 2006.

Make Me an Offer: Buying Unlisted Homes

Contrarian, zigging when everyone else is zagging, swimming against the stream, a bold move.

Reply.com announced that they are updating their web site "to add new features, including help in making "unsolicited offers" for any house in the country."
"The idea behind these sites is that the places you really covet are rarely the ones with for-sale signs out front. "For the right price, any home is for sale," says Payam Zamani, chairman and chief executive officer of Reply."

The articles' author, James R. Hagerty (WSJ) says,
"In the U.S., the timing of these new services seems odd. In the early part of this decade, a shortage of homes available for sale made buyers desperate and prompted some to go door to door with letters soliciting potential sellers. But the number of homes on the market has surged in the past year or so as home sales have slowed. In June, the National Association of Realtors said 3.73 million previously occupied homes were on the market, up 39% from a year earlier. In Orlando, Fla., for example, home inventories are about four times the year-ago level."

Well that's a very polite way of characterizing the current home market. But seriously, talk about a niche market, at first glance does this idea seem like a long shot or what?

On the other hand, we sold our house four months ago, and have been living in a rental since then because we have not been able to find a house that we'd like to buy. We're in Tucson where the inventory of homes for sale is at an all-time high. About 124% more homes for sale this year than last, and very few buyers.
But we still can't find one that we'd like to buy.
Are there a lot of people out there in the same situation?

Read The Article from the Wall Street Journal (subscription required)

Housing, the other shoe

In an article by Mark Whitehouse, todays Wall Street Journal reports

"Economists looking for evidence of a hard landing in the housing market will be watching closely next week when the National Association of Realtors releases its latest data on existing-home sales and prices.
Some think there is a chance the report will show the median price of a single-family home declined in July when compared with a year earlier. If so, that would be the first time prices have fallen in more than a decade.

Economic data often defy the forecasters, and monthly housing data are notoriously volatile. But whether the data show a decline or not, many people trying to sell their homes probably already have felt one. That is because the official numbers tend to be rosier than reality, particularly at turning points like the present...

Housing Measuring the Cracks in the Foundation (subscription required)

blame it on...

I've read a lot of articles and reader comments of articles that place the blame for the run-up in real estate prices on - take your pick - appraisers, real estate agents, lenders, builders or investors.
I think that's a lot of bull. The market is made by buyers and sellers.

The psychology of the market last year and the year before was way different than it is now. Everyone got caught up in the rising market, including buyers, sellers, investors, appraisers, lenders and real estate agents. Their thinking reflected what was happening then, and everyone wanted to get in on the action before it was too late.
Generally, a property is worth what buyers are willing to pay for it.
And last year, buyers were willing to pay a lot. This year, for a variety of reasons- including higher loan rates, high inventories of homes for sale, and what buyers now consider inflated home prices, they are not.
When buyers and sellers again agree that the price is right, homes will start selling again.
That is, barring some seriously negative economic, political, war, or terrorist event.

The Latest - Tucson Foothills Sales Activity 8/13

Here's the broad picture of sales activity - from the Tucson Assoc of Realtors MLS, for single family homes in the Tucson Foothills,during the past two weeks, that's 7/31 thru 8/13.This activity took place against a base of 361 homes currently listed for sale (priced from $225,000 - $22,000,000) yes $22 million!

New Listings = 55 (priced from $235,000- $4,100,000)
Homes gone under contract = 21 (priced from $299,900 - $2,495,000)
Homes Sold = 37 (priced $245,000 - $2,400,000)
Price Reductions = 35
Price Increases = 1
Expired Listings = 12
Withdrawn Listings = 29

This is an improvement from the previous 2 weeks. (for previous 2 weeks see The Latest - ...) There's been more positive activity, more sales. In this 2 week period there have been fewer new listings (17 fewer), more homes gone under contract (5 more), more homes sold (14 more).
There have been fewer price reductions (9 fewer) - depends on your point of view if that's good or not, fewer price increases (4 fewer) - that's a good thing in this climate, more expired listings (5 more), and more withdrawn listings (9 more), that's not soo good. Two weeks ago there were 377 homes listed for sale, today there are 361.
All in all it looks like a slow creeping improvement in the sales climate. And it's across a broad price range which is encouraging. Let's see if it holds, and maybe even improves, again. Would that be the start of a trend?

The beat goes on

Everywhere you look the real estate news is pretty bleak. Lots of homes for sale - few buyers. I'm not saying it's not so, but the media has not lacked in taking this news and wringing every bit of mileage from it. And try as I might I can't find a single story with a positive outlook for the real estate market. That's in general. There are some places in Texas that are doing well, Albuquerque N.M., and a few others, but in general the forecast is not so good. And most of the guru's seem to agree that we're at the relatively early stages of this downturn, and disagree only on how steep the decline will be. I'd love to hear an opposing point of view, a light at the end of the tunnel, or a silver lining point of view. Got any?
Below are links to some of these articles.

Finding a home in Tucson

It's ironic. There are more homes on the market now in Tucson than at any time in the past, and we can't find a home to buy. We sold our home in May of this year and about two weeks before our scheduled closing we made an offer on another home, which was negotiated into an acceptance and we went into escrow. Well, there were some inspection issues and we ended up pulling out of the deal during the inspection period.
And even though we've looked at dozens of homes since then and can't find one to buy, we're glad that we didn't go thru with that deal. We were rushing into it, wanted to make a move from A to B, and in hindsight it was close, very close, but not quite the right house for us and we went into this deal in April, just before the market here started it's real slowdown. Admittedly we're picky, but still, I'm a real estate agent in Tucson, I know the market and I'm seeing everything that is even remotely possible, and still nothing. Well almost nothing, there've been a couple that I just couldn't justify the price given the current market.
So we're living in a furnished rental, a 3 bed/2 bath SFR with a pool that's very comfortable and in a good location, but we have none of our stuff here except for our clothes. It's like living in a rented summer cottage for what is three months now and counting.
We're getting really anxious to buy. We catch ourselves in the end, but we're starting to look at homes less critically, trying to talk ourselves into ignoring and overlooking things that matter.
We're very motivated buyers, with a lot of pent up demand.
And all the while I'm aware of what's happened and continues to happen in the real estate market, the slowdown in sales and where it's going, keeps me wondering if we should wait. I'm not fence sitting, not intentionally anyway. On the other hand there have been a couple of homes, that had it been last year, we probably would have put in an offer, and probably would not have walked from the one we walked on in the first place.