Yes, that does appear open to interpretation. Apparently, they are using
stats acquired from counties and municipalities, then taking the median,
rather than misleading average figures for sales to arrive at regional
market values. They would easily have access to assessments, though
usually inadequate, mortgage assignments and foreclosures as well.
That most Boomers own outright is a reasonable assumption, still, two
things come into play. First, their property is still only worth market
value. Healthy equity can be whittled down swiftly in a downturn.
Second, many boomers subscribed to the practice of investing/gambling
their equity in other property or other markets. Many would have lost
their shirts in Mutuals, stock market, and so on...
This is dismal, and with a US market down a straight 57 months, real
estate activity being a lead indicator of economic strength, things are
indeed scary.
Natalia
According to the site, US home values have fallen 8.2% from Q1/2010. The
US Zillow Home Value Index is now down 29.5% from its peak in June of
2006. According to Zillow, the US housing recession has now lasted 57
months, and there doesn't appear to be an end in sight.
Only one metro area in the United States showed a positive change YoY
(Honolulu). One metro area was flat (Pittsburgh), while the rest were
all down from Q1/2010. According to Zillow, Detroit and Atlanta were two
of the metropolitan areas that have been the hardest hit over the past
year.
From Q1/2010 to Q1/2011, an unbelievable 74.5% of homes in the United
States dropped in value. This is still well off from the peak of 85.5%
in Q1 of 2009, but an astonishing (and painful) drop nonetheless.
According to Zillow, 37.7% of the homes that were sold in the United
States in March of 2011 were sold at a loss. This is another record.
Zillow estimates that the average home in the United States will drop
7-9% in value in 2011, and that a bottom in the US real estate market
won't come until late 2011 to 2012 "at the earliest."
What's the Zillow Home Value Index?
Before we tackle the Zillow Home Value Index, be sure to learn about the
Zestimate home valuation
<http://www.zillow.com/wikipages/What-is-a-Zestimate>, since this is the
building block for the Zillow Home Value Index
<http://www.zillow.com/local-info/>. A Zestimate is Zillow's estimate of
the current market value for a home. We have tens of millions of
Zestimates - one for most homes. Our data is refreshed regularly to
reflect real estate transactions that could affect you - even if you're
not buying or selling a house.
*OK, so what's the Zillow Home Value Index?*
The Zillow Home Value Index is the median Zestimate
<http://www.zillow.com/wikipages/What-is-a-Zestimate> valuation for a
given geographic area on a given day.
*Say again?*
Essentially, it is the middle point. Exactly half the Zestimates for a
region are below this number and half the Zestimates are above it. It is
expressed in dollars and is for a particular geographic region (e.g.,
Zillow Home Value Index = $125,441 for Baltimore
<http://www.zillow.com/homes/for_sale/Baltimore-MD/> on Aug. 18, 2009).
*Can you give me another example?*
Sure. Let's take Seattle
<http://www.zillow.com/homes/for_sale/Seattle-WA/>. On Aug. 19, 2009,
the Zillow Home Value Index for single-family homes in Seattle was
$373,714, which means half the homes have values less than $373,714 and
half have values greater than $373,714.
*So, how do you create the Zillow Home Value Index?*
With lots of data. For example, suppose there are 101 homes in your
county. Zillow would create a Zestimate for each of these homes. We then
arrange all 101 Zestimates from lowest value to highest and, starting
from the smallest value, we would pick the middle one - the 51st - and
this would be the Zillow Home Value Index for your county on that
particular day.
*What's the difference between this and averaging the figures? Wouldn't
that be more logical and helpful?*
The median Zestimate is much less sensitive to extreme values than the
average Zestimate (here, "average" refers to the mean). Look at these
two examples and you can see why.
*Example 1:*
$230,000, $232,000, $242,000, $243,000, $250,000
In this series of Zestimate numbers above, the Zillow Home Value Index
is $242,000 (the value in the middle) and the average is $239,000 (add
all the numbers together and divide by 5).
*Example 2:*
$230,000, $232,000, $242,000, $243,000, $923,000
If you change just one number by a large amount, it skews the data. In
the numbers above, the Zillow Home Value Index is still $242,000, but
the average is now $374,000. Therefore, the median of $242,000 is
arguably a better representation of all five numbers than is the average
of $374,000.
Since housing data has lots of extreme values in it, the median is a
better representation of the general level of the housing market than
the average.
*Where do you get the data to create the Zillow Home Value Index?*
We receive this data from counties and other municipalities, though not
all jurisdictions make it available. However, we are adding data all the
time. So be sure to check back.
*
How does the Zillow Home Value Index affect my home?
*
In many ways! If the Zillow Home Value Index for your county is $215,000
today and was $210,000 yesterday, this means that a typical home in your
area is worth more today than yesterday. So, if you're thinking of
selling, you can evaluate your own home relative to the surrounding
market, or if you're buying, you can learn what's happening in other
markets.
*How is neighborhood appreciation calculated?*
The rate of appreciation on these levels of geography - ZIP code,
county, state, U.S. - is based on the Zillow Home Value Index.
Cumulative appreciation is the simple ratio between today's Zillow Home
Value Index and the Index for a reference period (e.g., the Zillow Home
Value Index one, five or 10 years ago).
*How often is the Zillow Home Value Index updated?*
The Zillow Home Value Index is updated at the same time that we update
Zestimates. These updates reflect new real estate transactions that
affect an area's Zillow Home Value Index.
*Is the Zillow Home Value Index the best indicator of tracking real
estate markets?*
We feel it is, because with the Zestimate, we have an estimate of the
current value of every home in the area and, thus, can estimate what the
median sale price of the whole area would be if every home were sold on
the same day: It would approximately equal the median Zestimate, or
Zillow Home Value Index for that area.
*If someone didn't use the Zillow Home Value Index, what would they use?*
One popular method is using the median sale price of homes over a
certain period of time, such as a month. While interesting, this measure
is problematic because it is influenced by the mix of housing sold in
the period of time associated with the metric.
For example, if high-end homes were not selling very well, but mid-range
homes were, then the median sale price will be lower than it should be.
It will not be an accurate reflection of the "general" level of home
values because the median is taken from the set of mid-range home sales
that happened in the period, ignoring the high-end homes that didn't
sell. The median sale price would be a perfectly accurate reflection of
home values in an area if every home were bought and sold in the
particular time period. Since this is highly unlikely, the median sale
price is biased to the extent that the homes sold in a given period are
not completely representative of all the homes in the area.
*OK, I think I got it. So, how do I find the Zillow Home Value Index for
where I live?*
Go to the "Homes" tab and enter your address. Then click on the address
in the map bubble, then "See home info," the "Zestimate & Charts." The
Zillow Home Value Index is located under "How This Home Stacks Up."
Remember -- a Zillow Home Value Index can apply to the following
geographic levels: ZIP code, city, county, state and U.S.
On 5/13/2011 10:22 PM, Mike Spencer wrote:
D&N quoted http://www.cnbc.com/id/42955097:
The number of homeowners under water -- or, those who owe more on the
mortgage than their house is currently worth -- amounted to 28.4
percent of single-family homeowners, representing a peak since Zillow
began calculating the data in 2009.
It's not explicitly clear if this is a percentage of *all*
"single-family homeowners" or of those with mortgages. The latter
interpretation might be explained by the fact that the datum apparently
originates with the real estate marketing industry for which wholly
owned houses not for sale don't, conceptually, exist.
The former interpretation, though, means that things are worse, far
worse, that the datum superficially indicates. The so-called boomer
generation, a disproportionate bulge in the demographic profile, is
now approaching retirement. It's a reasonable surmise that typical
home owners in that group have no mortgage at all. That might mean
that something like *half* of mortgage holders are financial
submariners.
The surmise doesn't take into account the possibility that a notion of
"typical" may be distorted by a trend to take out a mortgage to cover
medical expenses in an aging cohort or that it may have become
fashionable to mortgage a paid-for house to cover expensive retirement
hobbies (such as cruises) or just to keep visibly ahead of the
Joneses.
- Mike
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