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Yes, I know about Zillow's bad reputation regarding estimates in all but suburban neighborhoods in which all the homes are about the same size and built within a few years of each other, but I was really surprised by their latest projection in my tourist-oriented community. My community consists mainly of fairly modest to middle-income homes (both year-round and seasonal), but there are about 20 or so multi-million dollar waterfront summer homes, and vacant waterfront 1+acre lots now sell for over a million dollars. There are also five condo communities with condos going for anywhere from about $50k to $900k (depending on age, view and size); most of these are rented for anywhere from a few days to the entire summer. I would guess that there are only about 80 single family homes occupied year-round.
So now all that being said, I was surprised to see that the Zillow "typical home value" for my area is $292,100, which was the exact price that the last single family home sold for, and this was the only single-family house sold in the past three months that was not a condo.
So now that makes me very curious as to how Zillow decides what the typical home value is. Do they just take the number of homes sold during the past three months or so and take an average, or what?
P.S. Btw, the above home sold for 7% over the listing price (which has been typical since last summer), and yet Zillow is predicting a 6% decrease in home prices here for next year. Any guesses as to why that might be? Do you think that Zillow is predicting a recession in which second homes or moving to a rural area will be less in demand?
If you look at the fine print, Z has a disclaimer that it's not to be relied on for value and there and there is normally like a 7% +/- margin of error on average for off market houses, or something like that (paraphrased of course).
My opinion only and I have no official stats: In a rural area, I would expect the margins to much larger, maybe 15% +/- or worse.
Zillows accuracy depends on how your house compares to the other surrounding recently sold houses in size, acreage, features condition and quality. It is just a computer average. Where it falls apart are places where your house is very unique.
We need a zillow sub-forum for people who are losing sleep over zestimates
Why would I lose sleep? Zillow says I’m rich!
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