Using Zillow for Current Housing Market Research
Are you interested in buying a new house?* Do you have a new job somewhere else and need to sell your current house before you can put down 20% to avoid PMI on your next house? How do you look up comparables for your current house and what is out there in the neighborhood you want? Where should you begin your current housing market research?
It’s a great, free tool on the web. You can get started looking now before you even think about picking up the phone to interview an agent. Zillow gives you a general look and feel for the housing market without any commitment–like any good dating website! This is not a replacement for the MLS, but as a general research tool it is a fantastic starting place.
Bonuses of using Zillow for current housing market research
You can use Zillow in conjunction with Google maps to see where you want to live. A satellite view goes into effect once you zoom into the map within a block or so. You can pretend to take a stroll down the street using Google Maps’ street view. The only downside is you do not know what the night life is like or if there is a noisy pack of wolves next door.
Are you curious about a particular angle of a picture of the yard? Zoom in to see if there are trash cans or something unsightly ahead of time!
In addition, you can get a feel for the kind of neighbors based on the birds eye view of the yards.
Once the satellite photo goes into effect, you can also see rough estimates of the property lines for each property. This gives you a feel for the various sizes of properties in the neighborhood and if some higher prices are justified by larger lots, not just the square feet/bedroom/bathroom count of the house.
Once you have a general idea of where you want to live, you can see what is going on in the neighborhood. Are there lots of upgrades shown in the pictures of current and past listings? Are there lots of fixer uppers?
It is also possible to find past sales prices. By finding comparable listings (not crossing major roads, similar size/beds/baths and sold in the last few months) you get a feel for the amount of financing might be approved.***
Another bonus of using Zillow to research the current house market is discovering the amount of taxes you should expect to pay. Check out the “Price/Tax History” section of any house–even one off market–to get a general idea.
The information saved on Zillow is also dependent on the information made available by individual states. For instance, Texas is one of those states which does not publish the sold prices of houses. My workaround: you can always look at Zillow’s “Price/Tax History” to see what the listing prices were when they were up for sale. Did the “Listing removed” part get taken down fairly quickly after the “Listed for sale”? Meaning, it sold in a timely manner. If so, the price next to “Listed for sale” is a close enough estimate for me. If the house for sale has not been on the market since Zillow started tracking, I look at the neighbor’s house and so on.
Shortcomings of Zillow
There are some caveats to keep in mind while performing your own current housing market research. Zillow is a great research tool to start, but it is not a replacement for the MLS when you are actually hunting and making offers. New listing and current listing updates take time to get to Zillow. A listing could be gone before it ever hits Zillow!
MLS is king when it comes to reality on the ground. Real estate agents often give you your own portal to the MLS based on your search criteria. You can also find local listing websites which are more accurate. For example, www.har.com is the local Houston area real estate listing website.
Second, did you notice the little numbers on every property in the map listed above? That is the Zestimate. It is Zillow’s own proprietary guesstimate at the current value of each property.
I disregard all these numbers and here is why: the Zestimate is not necessarily reflective of the actual price. No one knows what upgrades or disasters are actually inside a house without pictures. If a house is off market there is no way of knowing what is really in a house without seeing it with your own two eyes. Even it is on the market there are reasons why certain angles and entire rooms are “left out” of photos.
Here is one such example my friend and I encountered last week. She found a stunning apartment–it is every bit our shared taste and style!
However, I questioned the *only* picture of the view outside. Why is it at an angle?
With the help of Google Maps street view I discovered the additional view–an apartment sized trash bin!
I felt validated at my skepticism. I am still laughing proudly at my spidey senses on top of my sleuthing skills, much to our disappointment.
My same friend and I learned a similar lesson visiting a couple really nice looking apartments. The amazing pictures online did not accurately capture the finer details, which left something to be desired. While our hunt was discouraging, it also made us very glad we visited. We were relieved my friend did not rent it sight unseen, which we considered in the hot rental market of Long Beach, CA. A million pictures will not replace an on site visit.
An estimate (asking price or Zestimate) is not the same as the price someone is willing to pay OR the price given in an appraisal. Similarly, the Zestimate advertised on Zillow in several neighborhoods flooded by a hurricane seem about 100K+ over the real value.
Personally, I find the Zestimate on my own home purely entertaining. It’s like the stockmarket–the only price that matters is what you paid and how much someone is willing to pay for it when it goes up for sale. Anything in between is just entertainment (or sheer terror if you needed to sell in the free falling market of 2009). And if you are not selling anytime soon, is there any price you can put on the luxurious upgrades inside?
All that said, Zillow really is a great tracking and research tool in your back pocket when you are preparing for your next move. I would recommend looking well in advance so you have a feel for the market long before you make your offer. Not only are you giving yourself realistic expectations, but you are also setting yourself up for success with a fair offer in the current housing market.
*This article is applicable for renting as well. If you click on any property you will also see a Rent Zestimate in addition to the regular Zestimate.
**There are other great websites like Truilia and Redfin, but for the purposes of this blog and limiting the nerdy minute details I’m sticking with Zillow.
***Financing is definitely dependent on many factors including your own statistics on top of what is really going on in the housing market at the time of sale. For example, I’m looking at stripped out houses from Hurricane Harvey. Past prices are reflective of what it could be if it was rebuilt, but now, it probably won’t go for that since it is now considered a flood zone. Or it might go for lots more because after I get my hands on it the next owner will be looking at a palace.