Posts from — February 2008

Zillow.com has become a media darling. In case you don’t know, Zillow.com is where you can get the company’s take on how much your house and millions of others across the country are worth, and has become one of top time wasters of homeowners. Here’s how it works: you go to zillow.com, type in an address, and the nice thing is, as soon as you type it in, it gives you an aerial picture of the house. It tells you what Zillow believes this house is worth.That would be the “zestimate.” And not too long ago, zestimates were the talk of cocktail parties everywhere. People started zillowing neighbors, bosses, celebrities. Even CNN got hooked, publishing zestimates of celebrities in their popular Fortune Magazine. And Investors have been hooked as well, investing over $50 million in venture capital.

But at the end of the day, does Zillow’s zestimates provide accurate information on the value of your home or the home you wish to buy?

The answer: not in Texas. And amazingly enough, Zillow agrees. Take a look at Zillow’s own accuracy information of their zestimates of some Texas counties, including Bexar and Comal county:

In Bexar county, only 27% of Zillow’s zestimates are within 5% of the homes value! Even worse, only 76% are within 20% of the home’s value.

Now think about this, if you are selling your home, and you use Zillow to determine your home’s value you, the odds are that you will be off by as much as 20%. On a $200,000 home that equates to $40,000 that you could overprice your home where it will never sell, or you undervalue your home and lose the equity that you you have built up over the years.

As a homebuyer, if you use zestimates to determine the offer you wish to make, you could be overpaying for a home.

The bottom line: while zestimates are fun for zillowing your boss’s home, it is not a tool that you should be using to determine the sales price of you home, or the offer you should make on a home you wish to buy. There is only way to do that, and that is to use a real estate professional that has access to local, property specific, and comparable home information. Greg Swan, a top real estate professional in Arizona, has done a great job of showing just how out of touch Zillow is with reality at his blog.

And if you don’t believe us, listen to Zillow’s own Sara Bonert, who wrote in her blog, “ At the end of the day, the consumer still needs a professional to help determine an asking price that is JUST RIGHT! “

If you are thinking of selling your home, and want an accurate value of your home, just fill out our Home Value Request page and we will send you a free CMA (Comparitive Market Analysis).

COLLEGE STATION, Texas–(BUSINESS WIRE)–Affordable housing is the state’s ace in the hole in the predicted future high-stakes real estate version of Texas hold ‘em. In fact, the state’s leading expert on residential real estate is betting housing affordability will be the “most significant growth stimulant” for Texas over the next 25 years.

“Texas is the most housing-affordable, high-growth state in the nation,” says Dr. Jim Gaines, research economist for the Real Estate Center at Texas A&M University. “So far, skyrocketing home prices common to fast-growing states like California and Florida have not occurred in Texas.”

In mid-2007, the state’s median-priced home was $151,000 – some two-thirds the national median of $229,000 and about 75 percent less than California’s $589,000.

According to the Texas Housing Affordability Index compiled by Gaines, a Texas family earning the statewide median income has 152 percent of the income required to qualify for financing on the median-priced home. Nationally, families have about 16 percent more than is required.

Other measures show just how affordable Texas homes are. One expresses median house value as a multiple of median housing income. The lower the multiple, the more affordable the housing.

“In 2005, the national median home value was 3.62 times the median household income,” says Gaines. “In Texas, the median value was only 2.52. Current median prices to median household income multiplies are even higher, and the difference between Texas and the nation are even more pronounced.”

Gaines says housing affordability is just one card in a deck stacked in the state’s favor. The other winning cards include lower cost of living and cost of business, greater employment opportunities and an appealing lifestyle.

“Events and circumstances point toward a Texas-sized boom between 2005 and 2030,” Gaines writes in the latest issue of Tierra Grande magazine, a periodical sent to all the state’s real estate licensees. “The state’s population and economy — as well as its housing and commercial real estate markets — are poised to explode in volume and prices.”

Gaines says the real estate game is changing, and the stakes are getting higher.

“Things will change dramatically from what many Texas are used to,” he predicts. Population will be a key player at the table as Texas is projected to grow by 13.6 million by 2030.

“That’s the equivalent of adding another Dallas-Fort Worth metropolitan area, another Houston metropolitan area, another San Antonio metropolitan area and another Corpus Christi,” he says.

“Growth and prosperity will spread throughout the state, but most of the growth will occur in the state’s urban areas,” says Gaines. “Four out of every five Texans will live in the Dallas-Fort Worth-to-Houston-to San Antonio triangle.”

New Texans will bring new jobs.

“Texas leads the nation in job creation. If Texas maintains its average employment-to-population ratio as expected during the next 25 years, the state will add another 4.5 to 5.8 million jobs,” says Gaines. “Job growth is expected to be stimulated by overall U.S. economic growth and enhanced by Texas’ employment-friendly characteristics.”

More people and more jobs will lead to higher personal income.

“Extending the long-term trend that began in 1969 suggests the state’s total personal income could increase by $1 trillion by 2030,” says Gaines. “The 2005 Texas median household income of $42,139 could reach nearly $68,000 by 2030.”

With the gains will come pains, says the noted economist.

“The projected population and employment boom will also strain local and state resources to provide public services and infrastructure,” he said. “Texas will experience the same growing pains as other high-growth states. State and local fiscal capacities will be stretched, and Texans will debate the level and type of growth they want in their communities.”

For more on Gaines’ Texas economic outlook for 2030, including his thoughts on what might disrupt the ideal game plan, see “Looming Boom: Texas Through 2030” available online at recenter.tamu.edu/pdf/1841.pdf.

The Real Estate Center (recenter.tamu.edu) has been providing solutions through research for 35 years. Funded primarily by Texas real estate licensee fees, the Center was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers and the general public.