Friday, June 14

Zillow Now in the Business of Predicting Future Home Values

Zillow can now see the future of your home — or at least, it’s trying to with its new proprietary algorithm, which it says can predict the dollar value of your home one year in the future.

Its new software is going by the name of “Zestimate forecast,” and the company says that the estimator, which will predict either growth or loss, is available for about half of the homes in their database, which consists of about 100 million properties.

“It was important for us to give [consumers] another bit of information that might help them in understanding the real estate market and help them make the buy-or-sell decision,” said Svenji Gudell, Zillow’s director of economic development. In order to come up with the “Zestimate,” Zillow’s formula considers various factors, including the number of bedrooms and bathrooms of the home, square footage, as well as periphery characteristics, such as local unemployment rate and population growth.

Right now, in order to use the forecaster, one needs to be a registered member with Zillow. Checking any potential home is easy — one just needs to type in an address and scroll to see the estimated value. While some industry watchers are leery of the accuracy of the forecast, Zillow claims that the site and its users have been satisfied so far with its current accuracy levels, which it will continue to try and improve. “More than half of the homes (we estimate), 64 percent, are within 10 percent of what they sell for. That, to me, is pretty impressive,” said Gudell.

It’s worth noting that the tool will have some limits owing to what can’t be input into a calculator. If the homeowner decides to make upgrades to the interior and exterior, for example, that will raise the home’s value, but won’t be a part of Zillow’s prediction. According to Gallup studies, landscaping alone can add 15% more value to a home’s final selling price.

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