If you have searched for real estate on-line, the chances are good that you have looked at, or at least heard of Zillow. Zillow is one of the most popular real estate sites on the web, and all of Windermere’s listings are posted on it. Of all the tools the site has to offer, the most frequently discussed one has to be the Zestimate. A Zestimate is Zillow’s estimate of the current value of a home, and can be obtained for millions of houses in the US, whether they are on the market or not.

Discussions about Zestimates are primarily regarding their accuracy. Zillow clearly points out on their web site that a Zestimate is calculated using statistical methods, not by actually visiting the home to understand its unique features. Statistical methods are most applicable in urban areas and developments where square footage, the number of bedrooms, lot size and similar data can do a good job of describing a home. They are much less useful for unique properties such as waterfront or view properties, properties that differ significantly from those surrounding them, or properties with significant value in outbuildings and land improvements.

Zillow recognizes the limitations of Zestimates and publishes statistics about their accuracy on their web site. According to the site, Kitsap County enjoys one of the highest Zestimate accuracy rates in Washington. Even so, there is a median Zestimate error of 9.5% in the county, and a Zestimate is within 10% of the actual selling price only 52% of the time.

To put that in perspective, if 100 homes sold for $300,000 in Kitsap County, 52% of them would have Zestimates that ranged between $270,000 and $330,000, a $60,000 spread. The remaining 48% would fall outside that range.

It is always interesting to know what your house might be worth today, and a Zestimate can give you a feel for that. But if you are considering buying or selling a home, the margin of error in a Zestimate is too wide. You need a CMA (comparative market analysis) from a reputable real estate agent or an appraisal to know the price you should ask or pay.

To learn more about Zestimates click on the link below:

Learn More

To see the full accuracy statistics on Zestimates  for all areas of the US click on the link below. After clicking on the link, to see details about counties in Washington, click on States/Counties in the table header, then on Washington:

Zestimate Accuracy

As a seller you should consider that there are still many bank foreclosure properties yet to come on the market, as well as a backlog of other owners waiting for the conditions to be right to sell who will begin to enter the market when conditions seem better. These two supplies of homes entering the market will put downward pressure on prices, minimizing the likelihood of significant sustained price increases in the near future. My personal feeling is that prices in our area will be flat for the next two to three years and could take several years more to reach the peak we saw in 2006-2007. While it doesn’t feel good to sell a home for less than it used to be worth, chances are that you will be buying a replacement home at a reduced price as well. So if now is the right time to sell for personal reasons, waiting for the market to improve could be a long and unnecessary delay in getting your life moving in the direction you have in mind.

 As a buyer, you should consider the fact that average list prices in the area I watch have been moving up and down around approximately the same level since mid to early 2009. At the same time, interest rates are currently at record lows, a 30-year mortgage averaging 4.54% with .7 points this last week. While interest rate increases have not yet occurred as predicted, they will begin to go up, probably in the next few months. Every 1/8 point increase in the interest rate is equivalent to increasing the home price by about 1.5%. For example:

Home Price = $300,000

Interest rate increases from 4.5% to 4.625%

Equivalent to price increasing to approximately $304,500

Because of this, assuming you would be financing the purchase, it is very likely that the cost of buying a home will increase in the coming months, even in the face of the probability that prices won’t be increasing. If you have considering buying and have the means to do it, now is a very good time to buy. Could there be an even better time in the future? Certainly, but trying to hit the very top or very bottom of a market risks missing the opportunity all together.

The graphs reached through the link below show the average market time, average list price and average sales price for homes over the past several years for North Kitsap County (NK), Southeast Jefferson County (SEJ) and Bainbridge Island (BI).

The graphs continue to show buyer's markets, with average selling price trends showing dramatic shifts in two areas. The NK trend has started downward again, following a period when they seemed to be stabilizing. The SEJ average has dropped sharply following what was a similarly sharp rise. The BI average has climbed sharply again following an earlier sharp rise and fall. The volatility is largely driven by changes in the price range of homes being sold, and a low volume of sales over which to average those changes, but price declines on individual properties continue as well.

Inventories are continuing their typical early spring increase in all three markets.

To view the graphs, click on the link below:

Market Graphs