Neighborhood real estate maps and Zillow
![Picture 16.png](http://www.annarbor.com/assets_c/2010/05/Picture 16-thumb-590x238-40882.png)
Zillow seems to think that the typical house on the east side of Packard Street is worth about $100,000 more than the typical house on the west side of Packard Street. Its automated valuation algorithms are a "black box," not subject to audit or independent confirmation.
Zillow
Who are the people in my neighborhood?
What's this house worth? More importantly, what are some other comparable houses nearby worth, so I can make sure that I have a fair estimate and some alternatives to look at if this one doesn't work out? That's the essence of any appraisal process; the appraiser, whether it's a human or a computer program, looks to find points of comparison that are nearby in many ways to see what your property should be worth.
On the national level, Zillow tries with some success to answer this question. The interesting parts of it are how it fails, and what that means for your neighborhood.
What is Zillow?
Zillow is a company based in Seattle that has an online real estate database. It scoops up records of property sales, real estate listings, foreclosure information and tax details and homogenizes them nationwide to provide what looks like a comprehensive, easy to navigate, and objective assessment of housing values.
News coverage of Zillow comes from multiple angles, both from the technology world and from the real estate world. The TechCrunch coverage of Zillow focuses on its various rounds of funding and its competitors, including Trulia. Real estate professionals have honed in on the flaws in the system's automated valuation model, which comes up with a number for what your house is worth without a person ever seeing it. The weblog Realty Infusion's analysis of the situation is a good overview.
Zillow and your neighborhood
Any time you delegate a complex pricing decision to a machine, you are at the mercy of whatever weird input got sent to that machine that it didn't expect.
Zillow works from public records of tax and assessment data, data which you can get piecemeal from other sources like the City of Ann Arbor assessment office. Every so often a real estate transaction will be on the books for $1 "plus other valuable consideration," hiding the true transaction value from those who would scoop it up for reuse.
Similarly, systems like Zillow use published real estate listings to help shape an estimate of the entire market. The term "unzillowable", noted by Joseph Ferrara, accounts for all of the intangibles that are not captured and cannot be captured by any listing. His list of unzillowable factors include hard to pin down details like the quality of the neighbors, the noise of traffic, the smell of the surroundings and the presence (or absence) of barking dogs day and night.
There can be other more insidious problems with any system built on automated data models. Data entry errors can cause a home next to you to show up at a wrongly low price, when your street is mixed up with another street across town. The neighbor's house supposedly sits on a lot that's 10 acres, even though you're in the middle of town. Garbage in, garbage out - yet, since the system is so convenient and not obviously so wrong, it gets used as a zero cost first appraisal by lenders.
The practice of making sweeping generalizations about the quality of a property without ever seeing it is know as "redlining." A 2008 Washington Post piece describes a practice of redlining by zip code, with entire swaths of area subject to more stringent lending requirements rather than parcel by parcel assessments.
Historically, the practice of redlining has destroyed neighborhoods that have been on the wrong side of the line and thus have been starved of investment. The Wikipedia page on redlining has a decent bibliography; I didn't track down a good reference specifically on redlining in Detroit.
Making your neighborhood more of a place and less of a commodity
The Zillow system, and by extension the entire residential real estate market of the housing bubble, is predicated on the notion that houses are commodities and that incremental slices of home value can be packaged and resold on the public market, without consideration for any of the underlying intricacies of the real world.
Neighborhoods that avoid the commodity trap have a sense of place that draws people in who want to live somewhere particular, and not just somewhere anonymous that happens to meet abstract database criteria. They host garage sales, fix up their parks, block off the streets for block parties and do other bits of civic improvement which go beyond what is ordinary. When push comes to shove, they are capable of mobilizing a pew full of people with visibly unhappy faces to sit through a four hour City Council meeting to press their cause.
Nothing can easily stop the sorts of challenges that every neighborhood around town faces - the lost jobs that cause people to move out but not move in, the sudden death in the family that leaves a perfectly good house in foreclosure or the turmoil in the residential real estate market. What can happen in neighborhoods is organized efforts to cultivate the "unzillowable", and build up the qualities that do not have numbers that make people want to live where you live.
Edward Vielmetti writes the Our Neighborhoods column for AnnArbor.com. Contact edwardvielmetti@annarbor.com.Â
Comments
Patrick Haggood
Fri, May 28, 2010 : 2:03 p.m.
Being currently 'in the market' I have used a lot of sites for home info including Zillow, the correct use of which is akin to Wikipedia - it's quick, concise and convenient and makes a fine launching point into further study, but students who write their entire book report from a Wikipedia article have earned their 'F'. Zillow puts on a page the selling prices for a range of houses, which help me winnow out neighborhood trends. I'll admit that I don't find their 'z-estimate' very useful. However if i really want more precise sales info, then it's over to the less convenient Ann Arbor assessment and property tax site. The assessment site is useful if you want to know the info for a particular *street*, Zillow is useful to give you an overview of which streets you should next lookup on the assessment site. I guess another web analogy would be the travel sites - Travelocity can give you a quick idea of what it may cost to fly the family to Disney world, but before you click [buy] you should double-check the prices posted on the Southwest or Delta sites.
Alison
Mon, May 24, 2010 : 12:50 p.m.
Hi Edward, Just to clarify, when I referenced incorrect information I was referring to instances where the current or previous homeowner(s) had made an update (i.e. convert a bath into a full bath) to their home but the update had not been recorded with the appropriate municipality. We do not knowingly post incorrect information. Alison Paoli
Vivienne Armentrout
Sun, May 23, 2010 : 9:20 p.m.
I love your comments about non-commodity neighborhoods and I would submit that many if not most neighborhoods in Ann Arbor are "nonZillowable" according to your criteria. I looked up my house immediately of course and was pleasantly surprised at the stated likely market value and not so pleased to find that I was located in Ann Arbor Township (according to Zillow). They have some work to do. (Among other things, I don't think that Ann Arbor Township includes any parcels in 48103.) (Ann Arbor Township has many fine properties and people, just not where I live.)
Alison
Fri, May 21, 2010 : 1:42 p.m.
Alison from Zillow.com here. I just got done readying your article and Id like to clarify a few things. The Zestimate (estimated value) is intended to be used a starting point when determining the value of ones home and not as a replacement for an appraisal or valuation by a real estate professional. In fact, next to every Zestimate on the site is a pop-up box with text saying, A Zestimate home valuation is Zillow's estimated market value. It is not an appraisal. Use it as a starting point to determine a home's value. Additionally, for every home that has a Zestimate, there is also a value range. The value range, found just to the right of the Zestimate shows the high and low estimated market values of a home. We have Zestimates for 70 million U.S. homes. Every time a home sells, we compare its Zestimate to the sale price, and we are transparent in what we find. The accuracy of Zestimates for every county is published on Zillow and is available here: http://www.zillow.com/howto/DataCoverageZestimateAccuracyMI.htm. Ann Arbor is in Washtenaw County, which has a 4-star rating and a median error of 11.8%, meaning half of the Zestimates in the county are within 11.8% of the selling price and half are off by more than 11.8%. If a homeowner feels like their Zestimate is incorrect, there are a few things they can do by claiming their home (found under the edit button below the picture on every home details page). Claiming their home allows the user to edit their home basic facts including bedrooms, bathrooms, square feet, year built, etc. Additionally, homeowners can create and publish their own estimate using the My Estimate tool found under the Zestimate. Here homeowners can add information about an extensive remodel and chose comparable homes nearby. Finally, owners can comment on their Zestimate so that other uses can see why it might be too high, too low or just about right. We understand that were not on the ground in every neighborhood, but we do help homeowners connect with people who are. In Zillow Advice, homeowners can ask a question about a particular street, like Packard Street, and get a response from a local professional. We also incorporate street view, which provides a curbside view of the home and its surroundings, and maps that help you locate the nearest school or grocery store, which is particularly helpful if you are not from the area. Our goal is to help people make intelligent decisions about their homes - whether it's buying a home, selling, renting, leasing, remodeling or financing - it's all about empowering people with data and information.