How Accurate is Your Zestimate

zestimateI am often asked about the accuracy of home valuations available online. I generally reply that Zillow and the other sites are a good place to start if you want to get a general estimate of what your home is worth. A “Zestimate” will give you a property value range, based on public records of the property’s:

  • Physical attributes
  • tax assessments
  • Prior transaction data

The drawback? These estimates are generated by a computer, not a knowledgeable real estate professional. Improvements and defects are not taken into consideration. Intangible features like ocean view, curb appeal, high-traffic streets and other factors are not considered. The estimate is really more of a snapshot of the overall market than an accurate estimate of a particular homes value.

If you are serious about selling, you will need more than a general estimate. Your homes unique features will need to be considered in order to reach an accurate estimate of its current value. An accurate comparable market analysis is based on:

  • Property type and size
  • Number of bedrooms and bathrooms
  • Age, condition and style
  • Location and appeal

To gather the data necessary for an accurate analysis it is necessary to research the Multiple Listing Service data, preview comparable properties or view online photos and compare that data to the subject property. Zillow and other home valuation tools are important in today’s market and certainly make interesting reading, but they are not a replacement for a professional opinion.

Are you thinking about selling your home? Call me today for a comparable market analysis. I will do the necessary research to determine an accurate valuation of your property. Of course there is no cost for the service or obligation.

Is Another Housing Bubble Forming

Housing_Bubble_articleA lot of forces came together in the early 2000s to fuel the US housing boom while putting it at risk of its ultimate crash.  Two trends related to loose lending standards stand out: 1) lots of new homebuyers were able to get mortgages, and 2) many of those new borrowers were able to do so by putting very little money up front. Combining these two forces, you got a massively leveraged housing market.

After the housing market bust we experienced  in 2008, many experts have been quick to warn that a new bubble may be forming in some areas of the country. There’s not yet a bubble, despite factors reminiscent of the last housing bubble, including low interest rates and somewhat lax rules on down payments for first time buyers. But this is no longer the case. And this lower leverage may be the most important difference between the housing market today and the housing bubble because it reduces the risk of a major downturn.

The biggest challenge facing the housing market right now is the lack of inventory available for sale. Prices are determined by supply and demand. If prices continue to outpace inflation and income in these areas, that can eventually become a problem. Right now buyer demand is out-pacing seller supply, across many price ranges, driving prices up.Current homeowners list their home to either trade up or downsize, opening up inventory for first-time buyers to come in. One can’t happen without the other. But current homeowners aren’t flooding the market with “For Sale” signs. Some are worried they won’t be able to find a new house or they’re still waiting to recoup their home’s value lost in the crash.

If you are a homeowner debating listing your home for sale this, now is the time, meet with a local real estate professional who can guide you through the process.

Want to Sell Your House? What About the Price?

house price-tagAre there any negative effects from changing the listing price of a property? This question haunts Brokers/Agents as well as sellers of property every day.The housing market is recovering nicely. Prices have increased by double digits over the last twelve months. Competition from the shadow inventory of lower priced distressed properties (foreclosures and short sales) is diminishing rapidly. Now may be the perfect time to sell your home and move to the dream house or beautiful location your family has always talked about.

The one suggestion we would definitely offer: DON’T OVERPRICE IT!! Sellers should be aware of the critical necessity of getting the price correct from the start. Sellers wanting to over list will ultimately take longer to sell and will sell their property for less. Even though prices have increased by more than 10% over the last year, the acceleration of appreciation has slowed dramatically over the last few months. As an example, in their April Home Price Index ReportCoreLogic revealed that home prices actually depreciated by .08% this month as compared to last month’s report.

Because investor purchases are declining and there are more listings coming onto the market, we believe that sellers should be very cautious when they price their house. The alternative might be that you could lose money by overpricing your home at the start.  On average, properties which experience a listing price change take longer to sell and suffer a price discount greater than similar properties. Furthermore, bigger price changes are found to experience even longer marketing times and greater price discounts. Finally, as for which properties are most likely to experience a price change, Knight finds that the greater the initial markup; the higher the likelihood that any given property will experience a listing price change.

Bottom Line Though it is a great time to sell your house, pricing it right is crucial. Get guidance from a real estate professional to ensure you get the best deal possible.

Experts Say Home Values to Rise Through 2018

043013_homeprices_600A recent survey of over 100 real estate experts and investment and market strategists asked panelists to predict the path of home values through 2018. Even the pessimists expect home prices to rise for the next five years. The idea that homes are a good stable investment has largely been debunked, in particular by Yale economist Robert Shiller. As usual, he is  reluctant to declare that home prices had bottomed. With that said, home prices are impressively up 23% from their March 2012 lows.

On average, panelists say they expected nationwide home value appreciation of 4.5 percent this year, with a steady slowdown in appreciation rates each year through 2018. But it’s worth noting that the most pessimistic quartile of those surveyed also see prices going up. It’s a modest amount, but they see prices going up a cumulative 10.9% through 2018. That’s a 2.1% rate annualized. Based on current expectations for home value appreciation during the next five years, panelists predicted that overall U.S. home values could exceed their April 2007 peak by the first quarter of 2018

Should we be worried that almost no one sees prices falling? The good news is that all of these home price bulls don’t see prices accelerating to bubble-era rates. Throughout the recovery, large-scale investors have purchased thousands of homes nationwide, particularly lower-priced vacant and foreclosed homes, fixing them up and keeping them in their portfolios as rental properties. This investor activity helped put a floor under sales volumes during the depth of the housing recession, but also created competition for many would-be buyers and contributed to rapid price spikes in some areas.

Panelists were also asked when the Federal Reserve should end its ongoing stimulus efforts, known as “quantitative easing.” Since September 2012, the Fed has been purchasing tens of billions of dollars worth of Treasury bonds and mortgage securities each month, which has helped keep mortgage interest rates low and stimulate demand. The program is now being wound down. More than 70 percent of the experts want to see the monetary stimulus reduced to zero before the end of this year, and the current pace of tapering will get us there.