Zillow is Off by a Small Amount. Try $250,000 off with Proof!

I have found how Zillow prices their homes. Please, this is definitely confidential information so I hope that we can keep this between us bloggers. I have found their head algorithm engineers and took a snap shot of their insanely accurate “Zestimate” figures. Here is the clandestine photo that I took of their uncanny picking abilities:



In all seriousness, let me show you an example of how off they really are. Below is a Zestimate of a home in San Diego county:



Zestimate: $848,926

Sale History

06/07/2006: $670,520
10/03/2005: $790,000
10/25/2004: $725,000

Currently this home is REO and is listed at $614,000. So Zillow is off by exactly $234,926! Are you kidding me? I wish I would have gotten away in graduate school with approximation like this. Can you imagine if you worked as a teller at a bank and you told your manager “yeah, I’m only off today by $15,992.32.” Your manager would smile and probably report you to the authorities once you stepped out of the building. This is only one case example of how distorted the current housing market is. When banks start getting more and more properties as REOs such as this one we will begin to see how shady the mortgage lending and housing construct has become. There needs to be some purging that happens in the next few years.

This home on the Dr. HousingBubble scale rates as:



What overpriced homes have you come across?

Filed in: Zillow real-estate Southern-California foreclosures

Even the Harlem Globe Trotters Couldn’t Spin Today’s Housing News!

Where do I start today? Negative news regarding housing is hitting the presswires fast and furious. First, CNN published a headline story describing that Nationally, housing has faced a record year-over-year decline in October. Biggest Recorded Drop Ever In addition, I was able to catch a glimpse this morning on CBS MarketWatch a headline story posting “Housing Sligthly Rebounds.” This story was pulled because opening the article I found that sales increased by a meager .5 percent, stopping (pausing?) a slide since February. In addition, the major factor that should have headlined was the record year-over-year price drop (kudos to CNN). My only conclusion to this journalistic faux pas was someone trying to spin the data; after all this is data from the National Association of Realtors, otherwise known as Bozo the circus clown of housing.

Next, the Wall Street Journal published an article showing areas that are overvalued. Take a look below for a snapshot of the article:



The article can be found here but take a look at this brilliant quote from the Jack in the Box talking head, David Lereah:

“David Lereah, chief economist of the National Association of Realtors, expects that nationwide prices will bounce back in 2007.

He adds that one-third of the country is primed for growth -- a claim that Mr. Winzer's research supports. And if you don't have to sell your home, the short-term turmoil underscores the point that it seldom makes sense to obsess over your home's value the way you'd obsess over, say, your Google shares. Better to sit back, enjoy your mortgage-interest tax deduction, and wait for better days.”

I’m hoping that you haven’t choked on your tongue after reading the above paragraph. This idiot is such a maestro when it comes to spinning bad news, maybe he should apply for the position of Ambassador to Iraq. One-third of the country is primed for growth? You mean like Texas, Montana, North Dakota, and so on and so on. How in the world he sees real estate bouncing back in 2007 is beyond my knowledge but it certainly won’t be the case for the coastal areas including, guess what, California! Oh my, more and more the media is finding it more difficult to spin the absurdity of what these morons are spewing.

Take a look at the chart again. San Diego is overvalued by 60 percent meaning prices should be around $210,000. Does it look like we will reach those prices anytime soon with all these delusional home owners thinking their 1,000 square foot box is worth half a million? I do agree with Lereah that prices will bounce; bounce off a cliff that is in 2007. As the housing lemming mafia marches to their doom, the drum beat of massive mortgage resets, recession, declining dollar, and housing related job losses is getting louder each day. My guess is that September of 2007 we will finally get the full effect of what is occurring and sellers will understand what it means to be underwater. You think someone that just lost $100,000 of equity is not going to feel the psychological effect? At this moment the Doctor recommends do not buy ANYWHERE in California until this mess clears up.

What is your guess for the turning point in housing psychology?

Filed in: real-estate mainstream-media Southern-California-Housing mortgages

Current Status of Real Estate Market: Boring!

A front page story on the Sunday L.A. Times talked about a few areas where real estate still remains persistent and commands high prices regardless of the overall market climate. These areas, mostly in the East Bay in Northern California are still bringing bids over asking price. My response? Who cares!!! The overall real estate market is trending down and trending down fast. What happened to year-on-year double-digit appreciation this year? We are on track for zero percent appreciation this year and definitely negative territory in 2007; the only question that remains is how low will we go? But the next few months will be absolutely and fabulously boring. Here’s why…

If you track inventory numbers, take a look at the MLS data or Ziprealty inventory numbers. Reduced price listings are growing and hovering around 35 to 45 percent depending on which county you are looking at. These sellers we will call:

Desperados – def.- Selling because they have absolute no choice.

Then we have a large contingency of sellers that have let listings expire or have withdrawn their home from the market. We will call these sellers:

Baghdad Bobs of Housing – def.- They feel they can relist in spring/summer 2007 and get their asking price. Why you may ask? Because this is housing playa! Housing always goes up.

So until we reach spring of 2007, the market will continue on its molasses downward trend and inventory will continue to build up on the backend only to be unleashed in Q1 and Q2 of 2007. These Bagdad Bobs of Housing (BBHs) will be coming to a gunfight with water pistols. Think of these factors that we KNOW will happen:

1. Major number of adjustable mortgages will reset. To the tune of $1 trillion dollars in 2007.
2. Housing appreciation stalled to negative. By definition of reason #1, we know many will be unable to refinance due to prepayment penalties and low or negative equity.
3. Massive inventory increases. See Baghdad Bob's of Housing for more info above.
4. Economy already laying off many in construction and industries associated with real estate.
5. War in Iraq draining our funds and the dollar at all time lows against the Euro and other currencies. Strikes at argument that Fed will lower rates to keep housing stable. Do you think housing is the most important issue in the U.S.?

You think the Fed can lower rates and inflate this bubble again? Doubt it. If anything, the Fed will need to adjust rates upward to compete for capital on the global markets. They will sacrifice housing for a stable dollar; it just has to be that way.

So for the next few months the housing market will be rather dull to watch. The party will begin in spring of 2007 and after that it is anyone’s guess what will happen. But we can easily predict that prices will not go up and that is almost the only thing we can say isn’t boring.

Filed in: real-estate mortgages mainstream-media

Think Housing Can't Go Down Significantly in Southern California?

I find it hilarious when I hear David Lereah, the N.A.R. housing shill, talking about how great it is to buy (or sell) a house today. These morons forget even what happened only a decade ago. Housing declines last many years (take a look at one of my links to housing cycles dating back to the 1800s). The above chart shows some massive changes in particular areas.

And another lame argument I keep hearing is all these buyers that are on the sidelines will jump in this upcoming spring and summer. You think buyers are going to jump in when they hear these headlines:


1. Housing prices declining at record pace.
2. Mortgage resets totaling in the trillions.
3. Foreclosures at all time highs.
4. Zero to negative appreciation.


Yeah, that is the rallying cry for housing. Actually sounds more like the siren call…

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Filed in: real-estate Southern-California-Housing