Are Zestimates pointing to Ztrouble?

Getting good information about real estate sales and property values in any particular area seems to be fraught with difficulty if you rely on any of the free internet services.

HomeGain and Zillow are two of the more popular ones, but comparing the results retrieved by these two websites for the same query can produce more confusion than insight.

You can always go see a realtor and they are likely to provide you with information on recent sales or you can go to the county assessor's office and search the tax records, usually for a small fee.

The somewhat controversial Zillow Zestimates (outlawed in Arizona?) along with the Zillow sales records are probably the best way to go poking around in an attmpt to learn more, but you really have to be careful about what you're looking at - some properties don't appear at all on their maps, some sales never show up, and some sales aren't really sales at all, but rather, title changes where some value - any value it seems - shows up in the tax records.

However, the Zillow graphical tools are without equal and the Zestimates are, if nothing else, very interesting - well worth the time spent for anyone who is curious about what's happening to real estate values in their neighborhood.

Here's a screenshot of the recent sales from a neighborhood not too far from where we used to live in Southern California - note the difference between the Sales Prices and the Zestimates.

While not claiming to be an expert on the subject, after reading a handful of reports on Zestimates over the last year or so, they all seemed to come to a similar conclusion - the estimates can be pretty good for large developments where there are many similar houses, but they can be pretty bad when comparable sales are more difficult to find.

The screenshot above is for an area where there are indeed many, many similar houses and any nearby 30 and 60 year old homes have been removed - this eliminates another common source of confusion that results when a new development is built next to a much older one.

In this one area of Southern California, it would appear that either home prices are falling rather sharply or that the Zestimates (based on comparable sales) are just wrong.

It is probably the former and not the latter - buying a 1900+ square foot house for less than $600,000 is something that has not happened much in the last few years in this part of California.