On Tuesday Zillow released their quarter 1 report for 2007 home values. Amongst all the numbers was a big headline for our area: Bellingham was ranked in their top 5 metropolitan areas for price appreciation. We placed 4th with 11.7% appreciation after Corvallis, OR, Grand Junction, CO, and Seattle.
This information came as a bit of a shock to me. I have tracked the real estate numbers for this area for years, and while I saw an increase in 2007, it wasn’t close to 11.7%. When I looked more closely, I saw why, and I also saw an excellent example of why we need to ask questions about the source of statistics before deciding how meaningful it is.
Zillow’s sample included 3 bedroom, 2 bath homes of 1500 square feet. Even allowing for a bit of variation (1.75 as well as 2 bathrooms, 1450-1550 square feet of floor space), only 20 of the 518 homes sold in Whatcom County through the MLS during the first quarter of this year fit that criteria. That is less than 4% of the homes sold. Common sense would seem to dictate that trying to generalize results based on a sample of that size is ludicrous.
I am just finishing up April’s statistics and will post them later today. We also keep an archive of our reports on our website. Feel free to read them and draw your own conclusions.
For more information on Bellingham Real Estate or to search for homes in the Bellingham and Whatcom County area visit www.JohnsonTeamRealEstate.com, your one stop Bellingham real estate and community information resource!
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I read your post on YoChicago. Thanks for giving them the scoop on the truth behind the numbers. That site is a total cheerleader board.
Lylene –
Hi, it’s David from Zillow. I can clear up the confusion here.
We do take a different approach to reporting house value trends but we consider more, not less homes than most similar reports. The Zindex which increased 11.7% in Bellingham is the change in the median Zestimate value and considers _all_ of the homes in the area. It’s important to point out that it’s not just all of the homes that have sold in the period — but rather, we report appreciation based on the change in value of all of the houses in your area. I hope that makes sense.
I can understand where the confusion came from — we have now also started reporting on the value of the “average American home” in each city. That house is a 3/2 with 1500 sq ft and its fascinating how much its value varies across the country. For this statistic we also use the value of all 3/2/1500’s in the area, not just those that sold — so in Bellingham, we didn’t only include the value of the 20 that sold in this metric but also those that did not.
Make sense?
Hi David,
No, actually it doesn’t make sense. I have always defined the value of a property as what a buyer would pay and a normal seller would accept. Until such time as a sale occurs, the actual value is unknown. So…how do you know the “change in value of all of the houses in our area” beyond what the market has demonstrated it is willing to pay? The stats I follow certainly do not indicate an increase of 11.7% in Bellingham home values from last year to this, nor do my day-to-day experiences with buyers and sellers currently in the Bellingham real estate market.
How does Zillow define “value”?
Lylene, David’s explanation is worthy of a politician. I have no idea what he’s talking about.
Somewhere along the line a sale MUST be made for a benchmark.
Four months ago we interviewed for a listing and the owner qouted the zstimate at $369K. Our comps showed an expected sale price in the $315K range. At the moment it is STI (listed with someone else) with a list price slightly above our original analysis.
As a basic tool for the consumer the zstimate is questionable at best. I’m guessing the zndex will be just as unreliable.
Bob
I’ve taken a quick look at your postings, which are very interesting. Lots of material and ideas! Congrats on being so focused!
http://www.Johnbeckssuccessstories.com/