Zillow Housing Outlook _ March 2010

8/9/2019 Zillow Housing Outlook _ March 2010

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Overview of Zillow

Data & Seattle Real Estate Market

Stan Humphries, Chief Economist


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Inside the Zestimate

Data from multiple sources


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Zestimate: A Look at Scale


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Accuracy: Openness as Core Tenet

Huge effort to be as transparent as possible about our

accuracy Regularly public detailed data on our accuracy (nobody else

does this)

Estimation error is defined as the difference between a sale

price and the Zestimate for that home on the same date asthe sale


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Accuracy: Commitment to Excellence

Among best in marketnow

Committed to beingworld-class in data,valuations, and

other analyticproducts

Heavy investment indata and analytics(staff, $$, computepower)


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Zillow Home Value Index

Median Zestimate for a

given geography on agiven day

Different than median

sale price notbiased by sales mix


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Home Value Index vs. Median Sale Price

Biases in mix of salescreate a bias in themedian sales price


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Seattle Home Prices: Zillow vs. Case-Shiller

Case-Shiller only looks at single-family homes (excludescondos/coops).

Case-Shiller only includeshomes that have sold atleast twice (and excludes allnew construction)

Case-Shiller includesforeclosure re-sales eventhough these aresubstantially different thannon-distressed sales.

ZHVI looks at all home values,regardless of what has soldor not.

ZHVI does not includeforeclosure re-sales.

MoM: 0.3%

MoM: -0.1%


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Real Estate Market Reports

Twenty metrics

coveringsales, listingsandvaluationsavailable on

every level ofgeographyfrom the USdown to ZIPCodes andneighborhoods


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Zillow Opens Online MortgageMarketplace

April 3, 2008By Prashant Gopal

Borrowers can use Zillow's new"Mortgage Marketplace" to getcustom loan quotes from lenderswithout having to give their names,addresses, phone numbers, orSocial Security numbers, or fieldunwanted telephone calls frombrokers competing for theirbusiness. Borrowers reveal theiridentities only after contacting the

lender of their choice

A One-Stop (Online) ShopApril 13, 2008

By Bob Tedeschi

Many Internet users are accustomed togoing to Zillow.com to see a roughapproximation of their homes value.Now the site is offering a way to findmortgages.

What I like the most is the opportunityto integrate the home shopping andhome financing process online, hesaid. Thats the way it works in the off-

line world, where I work with a realestate agent, then that agent hooks meup with a broker.

American Homeowners Owe MoreThan They OwnFebruary 15, 2008Mary UmbergerAs home prices continue to fall,more Americans have negative equityin their home the amount they oweon their mortgage exceeds theirhomes value, according toZillow.coms forth quarter report,released this week.

Zillow mapsUps and downs ofHousing prices2/12/08By Carolyn Said

An analysis of home-price changesin Bay Area ZIP codes to bereleased Tuesday bywww.zillow.com shows a map of theregion as a virtual checkerboard ofgood news and bad news.

Focus on Providing Insight into the Housing Market


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Seattle Real Estate Market


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Local Markets: The Good, The Bad and The Ugly


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Home Values: Seattle vs. US


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Seattle Market: Single-Family vs. Condos


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Home Values: The Counties Around Seattle


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Peak-to-Current Change in Home Values


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Month-to-Month Changes in Home Values


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Foreclosures in Seattle


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Seattle Market Dynamics: List-to-Sale Price Falling


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Seattle Market Dynamics: Less Price Cutting on Listings


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Continuing Challenges for Housing Market


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Negative Equity + Unemployment = More Foreclosures

Metro markets withthe highest rates of

negative equity


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Negative Equity Among the Largest Metro Markets


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Lots of Vacant Inventory


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Mortgage Rates Likely Will Increase After Fed Intervention Ends

Source: Deutsche Bank Global Markets Research


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Mortgages Continue to Reset and Recast

Source: Deutsche Bank Global Markets Research


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Home values nationally will continue to fall until Q2 2010

Likely another 5% decrease in the national ZHVI for a total peak-to-trough decline of 25%. Likely another 3-5% decline in homevalues locally before bottom is reached.

Further declines driven by foreclosures (themselves driven bynegative equity and unemployment as well as by more mortgageresets/recasts), increasing mortgage rates, an already highsupply of for-sale homes, and weaker demand after thehomebuyer tax credits lapse due to demand-shifting.

Butfor a buyer who intends to stay in home for 7-10 years, currentenvironment is attractive given a) timing the bottom is hard; b)

historically low mortgage rates; c) Federal tax credits; and d)housing affordability substantially improved relative to 2006levels.

Conclusions


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Internal Dynamics of the Current Real Estate

Market


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Foreclosures Move Up-Market

Homes in the top one-thirdof home values nowmake up twice theproportion offoreclosures they didthree years ago.

In 2006, the top one-thirdmade up 16% offoreclosures.

In July 2009, they made up30%.

High delinquency rates inPrime, Alt-A and OptionAdjustable Ratemortgages result inforeclosures outside ofsubprime.

Cure rates are low, andwith 21% of all single-family homes withmortgages underwater,they will likely stay low.


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Foreclosures are a Distinct Market from Non-Foreclosures

Foreclosures sell for

substantially lessthan non-foreclosures, evenafter controlling forlocation andphysicalspecifications.

In Seattle, foreclosedhomes currently sellfor 81% of non-foreclosure saleprice.

Across all metros,foreclosures sell forabout 72% of non-foreclosure saleprice.
http://www.zillow.com/blog/files/2009/11/discount9.pnghttp://www.zillow.com/blog/files/2009/11/discount9.pnghttp://www.zillow.com/blog/files/2009/11/discount9.pnghttp://www.zillow.com/blog/files/2009/11/discount9.pnghttp://www.zillow.com/blog/files/2009/11/discount9.pnghttp://www.zillow.com/blog/files/2009/11/discount9.png


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More foreclosures in anarea do lead to asmaller gap betweenforeclosure and non-foreclosure prices.

But this discount is rarelyless than 20%.

Methodology: Comparingactual sales offoreclosures andnon-foreclosures toZillow valuation

(Zestimate)

Foreclosures are a Distinct Market from Non-Foreclosures, Contd
http://www.zillow.com/blog/files/2009/11/image006.png


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Questions

Stan Humphries

[email protected]

Whitney Tyner

[email protected]

206-757-2718
mailto:[email protected]:[email protected]:[email protected]:[email protected]

Zillow Housing Outlook _ March 2010

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