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Tuesday, August 15, 2006

Zillow Releases Market Report, P-I Swoons

Enjoy this puff piece from today's Seattle P-I about the latest report from Zillow on Seattle's "impressive" real estate market.

A steady stream of potential buyers flowed through a big Craftsman house a couple of blocks from Green Lake on Sunday, apparently undeterred by its $695,000 asking price.

The house went on the market Aug. 8, but listing agent Mark DeSpain of Windermere Real Estate was not taking offers until today. He was expecting to get several.

"There was a time in the last couple years when you could get away with (waiting a week to accept offers) in almost any neighborhood," DeSpain said. Now, he said, it's possible only in certain high-demand areas.

DeSpain is backed up by new estimates released Monday by the Seattle online real-estate company Zillow. com for the first quarter of 2006.

Zillow pegged the median home value in Green Lake at $521,916 in June — up by an annualized rate of 32.2 percent from three months earlier, compared with 16.5 percent for the city as a whole. Broadview, Wedgwood, Westlake and Windermere were up by an annualized rate of more than 40 percent.
Wait, wait, wait a minute... Is there really a neighborhood in Seattle called Windermere? I've never heard of it... Can someone enlighten me here? [Update: Thanks to commenter Richard, I have discovered the elusive Windermere neighborhood.]

And now back to your regularly scheduled real estate cheerleading:
Zillow showed much lower appreciation in some other city neighborhoods, and even declines in Broadway and downtown. But the city's overall number was still impressive compared with the national increase of 6 percent.

"The market's still strong, particularly in desirable neighborhoods like Green Lake," DeSpain said.

"Green Lake is hot, hot, hot right now," said Susan Ryan, a real estate agent with Coldwell Banker Bain. "The amount of money that people are willing to pay to live in Green Lake boggles the mind."
Write that down, all you potential home-buyers out there. Real estate in Seattle is "impressive," "strong," and "hot, hot, hot..." Have I ever mentioned how much I love, love, love the balanced real estate reporting that comes out of Seattle's dailies?

(Aubrey Cohen, Seattle P-I, 08.15.2006)
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34 comments:

Anonymous said...

Will the last person to buy at the top please turn the lights off. It's really sad that people here are so out of touch with economic reality and willing to still pump top dollar into houses. On the other hand, when things turn in Seattle, it drops like a brick. I won't be surprised to see the bubble pop in a most significant way, probably dropping 20-30% in a few months (rather than years). There is just too much inventory, overbuilding, and emerging lack of buyers and awareness of the reality of real estate. All analyses are demonstrating that cities that went up the most and fastest, i.e. Seattle, due to non-traditional mortgage products, will have the biggest drops.

We're now T minus 6 months and counting for bubble hell to take Seattle by storm and teach a new generation of borrowers a hard lesson in fiscal responsibility, and expose just how many investors and flippers really buy here.

richard said...

Windermere is on Lake Washington just south of Sand Point and North of Laurelhurst.

matt said...

One shopper at DeSpain's open house, who didn't want her name used for fear her desperation would hurt her search

Sorry sweatheart, if you're buying at the market peak for something you cleary can't afford.... you're already desparate.

darth_s said...

"The amount of money that people are willing to pay to live in Green Lake boggles the mind."

Is this should be more correct as "The level of stupdidity of these people boggles the mind..."?

We can see herd mentality/lizard-brain phenomenon at full force here.

SourMash said...

The thing about this story that I find amazing is that it is based on one company's guess about what houses are worth. This isn't sales data. It's "ZIndex" data.

There is no indication that the reporter ever asked, "What if your estimates are wrong?" Or, even more pointedly, "Your estimates are based on county records, which everyone knows are painfully inaccurate. Why should we report this as news?"

Zillow is smart. Planting articles like this extends legitimacy to the notion that their algorithm is the baseline for home values.

The press release spells out the data source a bit more honestly.

I'm going to start marketing my MashIndex of home values based on an algorithm of rental price per square foot adjusted by a SeattleOptimist constant, the value of which will be a tightly guarded secret revealed only to venture capital investors.

matt said...

I remember checking a house out on Zillow a friend at work bought. She told me she did a cash-out refi in December for a house she bought in June. The appraiser, obviously used to getting jaw-boned by the RE/Lender community, re-appraised at +100K above what she paid. Only 6 months of appreciation and no re-modeling.

I looked on zillow and literally saw a straight line going from the "typical" appraisal curve to the new psuedo-appraised +100K value, ridiculous...

When everbody's humping the HELOC housing ATM it artificially inflates on zillow... more of a measure of city indebtedness than an actual measure of housing prices.

redmondjp said...

On my way into work this morning I listened to a piece on Kiro 710am about the still-booming Seattle RE market--they said that there was no bubble, and then went on to report that price increases were as high as 40% over the past quarter in some neighborhoods. The reporter was live in Green Lake, where there has been a 30% price increase over the last quarter, and a 1300 sq. ft. house is now listed at $579K.

They did go on to play an interview with a realtor who admitted that things have slowed down a bit, and instead of getting 10-12 offers per property, it's down to a more reasonable 2-3.

Wow. 30% in a quarter. Reminds me of those glorious times back in the care-free late '90s when Microsoft stock was doubling every 6 months (hmmm, what's it done in the past 6 months???).

meshugy said...

The thing about this story that I find amazing is that it is based on one company's guess about what houses are worth. This isn't sales data. It's "ZIndex" data.

They actually do a petty damn good job...everyone here keeps saying to ignore the median price reports from the MLS. Instead, they suggest going to the county records to see what houses sold for. That's exactly what Zillow does...on a massive scale. So they're doing all the work for you...

I've found their zestimates to be very accurate. When I check comps on the county records, the match up very well with what Zillow says my houses is worth. They're now showing it's worth $475K, which is about right. Although I've seen similar houses go for $500K. But generally, they seem to be right on.

matt said...

Instead, they suggest going to the county records to see what houses sold for. That's exactly what Zillow does...


They also base it on wild-assed appraisals for people doing the cash-out refi' madness as well... see my previous post.

Anonymous said...

A friend of mine bought a house in GreenLake (well, a block south of 85th) in June for $440k.

The house is 890 square feet.

I thought he paid too much to live so close to Aurora and 85th. (an intersection where there have been shootings in the past)

Only 2 months later, Zillow estimates his house is now worth $70k more. In 2 months!

$575 a square foot?! For what? So you can walk to Jack-in-the-Box?

http://www.zillow.com/HomeDetails.htm?zprop=49057683

richard said...

It's both amusing and disturbing when you see an 8.7% increase in Q2 and it is extrapolated into 40% YOY growth in prices.

I'd guess that the majority of people reading/hearing this news story actually believe houses went up 40%, and that it's bound to continue, and there's no bubble.

SourMash said...

Instead, they suggest going to the county records to see what houses sold for. That's exactly what Zillow does...on a massive scale. So they're doing all the work for you...

This is partly true. Zillow can be handy to browse recent sales prices, in a way that the county database is not.

But things break down when:

-Sales are not recent.

-Sales are not actual market transactions (refis, divorce settlements, etc.)

-County details about home (bedrooms, bathrooms, livable interior space, garage, age of improvements) are inaccurate or incomplete.

-There are no easily comparable homes in an area.

I hope the Zestimate on my place is accurate. But I think it's off by about 25% on the high side, largely because it overvalues price/sqft in my area.

Anonymous said...

Wow, This house looks overpriced to me...Is this the kind of listing that is not realistic? I was very suprised. Just listed too...if this sells , then something must be wrong

http://johnlscott.com/PropertyDetail.aspx?GroupID=29641359&ListingID=26255617&Sort=0

Anonymous said...

pfft. a house in my neighborhood (next to Greenwood Elementary) just sold for $900,000 (was listed at $875,000). Can't wait to meet the new neighbors ;-)...

frickin' greenwood. no views.

KAP said...

"I've found their zestimates to be very accurate"

Zillow has my home sold in June 05...actually, that is when we took a HELOC..we purchased in 03. The sales price in June is based on the sales price we paid in 03 + the 100k HELOC (even though we only wanted 20k..we only used 20k and pay interest on the 20k so no harm no fowl as I don't spend every penny available to me). Zillow also shows our home valued at 30k less then the house behind and one over that is the EXACT same model. Our home sits on a pool sized lot. Their home's backyard is maybe 5 feet deep. Their home sold 9 months ago at 40k LESS than what zillow shows it at today. Their home has gone up in Zillow three weeks in a row while ours is losing value. I saw their home when it was for sale and they do not have nearly the same upgrades as we do. Both homes have tile roofs, but zillow shows that they are comp roofs. I brought these "errors" to zillows attention and they have yet to do anything about it. I think Zillow is the worse thing that happened to the RE market. Too many people are starting to rely on data that has shown (me) to have no reasoning in their "Zestimate"

meshugy said...

frickin' greenwood. no views.

Greenwood is the new Ballard. Now that Ballard has joined the mile high price club of other N.Seattle hoods, there's nowhere else to go. Greenwood is the last frontier of N.Seattle. Next stop, Montlake Terrace!

meshugy said...

I think Zillow is the worse thing that happened to the RE market.

Interesting to hear your observations...they are dealing with a huge amount of unconfirmed data, so there are bound to be houses that fall through the cracks. Zillow actually has my neighbors house listed more then mine (same model, same year, but not as nice.) They cull most of their data from the county records...if you compare the records you'll often find why a house got listed for more/less then another. In my case, there's a 3/4 bath and a bedroom not accounted for on the county records. If zillow had that info, my house would zestimated even higher.

matt said...

Zillow has my home sold in June 05...actually, that is when we took a HELOC..we purchased in 03.

There you go Meshugy, the HELOC's are a big part of the Zillow equation and a lot of folks will get appraisals right before they refi for one of these. These ARE NOT listing prices or median sold prices... they are not at the whims of the market.

meshugy said...

There you go Meshugy, the HELOC's are a big part of the Zillow equation and a lot of folks will get appraisals right before they refi for one of these.

Appraisals are a pretty good way to judge the vaule....that's why they use them. The comprehensive appraisal done on my house was very throughly researched. It was very conservative and showed the house below the obvious market value....most appraisals I've seen around here have been like that. They tend to lag behind market value.

Nolaguy said...

Greenwood is the new ballard

I'm hoping that was said with sarcasm. If not, I find it funny for multiple reasons:

Most of Greenwood doesn't even have sidewalks. It's like unincorporated King County, but with more blight and crime.

"The new Ballard" - now THAT is amusing. I was in Ballard for the Seafood Festival recently. To be honest, I sure didn't see much that convinced me that Ballard was now "hip", or worth the current prices.

Of course, if you mean that Greenwood is like Ballard in that people are moving there because it's cheaper than other areas, I would certainly agree. But just because prices are going up, it doesn't mean that the area is a nice place to live.

richard said...

Well, even with 40% annualized appreciation, here's one flipper in Wedgwood/Bryant that went flopped:

MLS# 26125043 Listed at $475K. purchased for $462 on 12/23/2005. It's trustee sale, as the previous owner stopped paying his mortgage in February, and is $25K behind in payments.


http://www.zillow.com/HomeDetails.htm?city=SEATTLE%20&state=WA&zprop=49090151

matt said...

The comprehensive appraisal done on my house was very throughly researched

Yeah Meshugy, that's like saying all jelly beans are black. Paleez.I'm sure you had a wonderful appraiser, but that's not the whole pie.

Appraisal's are as much a part of the no-doc/neg-am racket as anything.

Its all connected, everyone's in on the bubble game right down the chain... and don't think this is a good thing , especially if you're using Zillow numbers to decide on a refi...

everybody wins except for those who buy at the top, its always the case...

matt said...

sorry, broken link above

matt said...

again sorry Tim, I'll get the link right eventually....

Anonymous said...

All analyses are demonstrating that cities that went up the most and fastest, i.e. Seattle, due to non-traditional mortgage products, will have the biggest drops.

We're now T minus 6 months and counting for bubble hell to take Seattle by storm and teach a new generation of borrowers a hard lesson in fiscal responsibility, and expose just how many investors and flippers really buy here.


Not all analyses: http://www.scotsmanguide.com/default.asp?ID=1455.

Anonymous said...

It's also worth noting that this is only the writer's third story for the P-I. Before that, he covered the Bellingham housing bubblette.

richard said...

Since 2000, the population declines by 6328, housing units increase by 15,008 and prices go up by ~70%.

Yup, it's fundamentals.

matt said...

Scotsman Publishing Inc. is a privately held company that has served the mortgage lending industry since 1985

Yep, straight shooters I'm sure...

Orion said...

King TV had a news story today about the median prices in King County increasing 16 percent in July. Here's the story. They don't mention where the data comes from, but even if it's correct it doesn't show a complete picture of the local real estate market. As has been discussed many times, median price isn't the best tool for analyzing the market. Notice how nowhere in the local media do they mention increasing inventories which have true significance.

Anonymous said...

Off Topic: "US Housing market at 15 year low"
http://news.bbc.co.uk/2/hi/business/4796649.stm

Anonymous said...

Have noticed two "New Price" signs on homes for sale in my neighborhood in Redmond. I hadn't been paying attention to how long they've been on the market, but I know a price reduction sign when I see it.

matt said...

another article about fraudulent real estate appraisers and the affect they're having on over-inflated real-estate.

So my question (which no one is answered) is if Zillow's RE prices are also influenced by Re-Fi's in addition to home sales, than wouldn't it also be true that since Re-fi's are more common than a home-sales they would have more influence over the database than anything?

Anonymous said...

it getting closer

http://www.oregonlive.com/business/oregonian/index.ssf?/base/business/1155696905214750.xml&coll=7

Anonymous said...

Heres tiny url for it

http://tinyurl.com/pcp6v