Tag Archives forhome values

Austin Real Estate and Automated Valuation Tools

inaccurate Austin real estate valuations

You’ve no doubt heard of Zillow, and know how inaccurate its Austin real estate valuations can be. That’s not completely the fault of Zillow because Texas is a non-disclosure state, meaning when you sell your house, it’s nobody’s business what you sold it for, or what the buyer paid.

This results in limited sold data being available in public records. Thusly, it’s more difficult for third party estimation tools such as Zillow, Trulia and Yahoo to produce an accurate home value estimate. In most states, all real estate sales data is public record and thus there is more data from which to draw conclusions about a particular home value. Not so in Texas. So, with the exception of lower valued homogeneous neighborhoods where value ranges fall within a fairly tight range of size, age and condition, estimates from Zillow (or Zestimates as they call them), can be all over the map, sometimes grossly inaccurate.

Lately I’ve been experimenting with a new valuation tool that mashes up public data with actual Austin MLS sold data. This is called Value Map and is provided by our Austin MLS to its members. I have mine it set up at AustinValueMap.com because the default url is long and ugly.  It’s free, no signup required. And so far, I’m finding it to be surprisingly accurate, though of course not perfect. You can also sign up for alerts when a property similar to yours and within a two mile radius is sold. For some reason, though provided by our Austin MLS, you can type an address from anywhere in the U.S., not just Austin. Try it out, let me know what you think about the accuracy of the value for your property, even if you’re not in Austin.

Lending and appraisal companies seem to be trending toward automated valuation system. The Value Map product is used by banks and appraisers all over the country. It uses a proprietary algorithm to determine values. Often, when we sell a house, the bank trusts the value produced by this methodology and won’t even order a full appraisal, opting instead for a “drive by” appraisal, where an appraiser drives by to make sure the house is indeed there, but doesn’t go inside or perform the full appraisal. I think this is dumb.

On the other hand, though it might be inaccurate, the valuation tool won’t commit purposeful fraud, as many appraisers and lenders did during the most recent real estate boom. So it may be, from a bank/lender perspective, the benefit of fraud elimination outweighs the occasional over-appraising of a home. And probably, if the value is way off from the contract price, they’re going to order a full appraisal anyway.

But as a buyer or seller, will there ever come a day when you simply type in your address and it spits out the true market value of your home (what a buyer would pay)? No (except by coincidence), and here’s why.
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Posted by Steve
6 years ago

Housing prices fall below replacement costs, with further to go

This article below came in my Daily Real Estate email news today. Says that housing prices in many places are now below replacement costs, meaning you can buy an existing home for less than it would cost you to build one.

Then, in the same newsletter, another article (also below) saying that prices have further to fall. Wow. Of course Austin, except for specific exceptions, is not an area where housing prices have plunged because we had no huge price runup that need undoing.

Daily Real Estate News  |  December 4, 2008 
Housing Prices Fall Below Replacement Costs
Housing consultancy Global Insight reports that nationwide, housing prices are now 3.8 percent undervalued, based on total market value. It says values fell at a faster pace in the third quarter after stabilizing earlier in the year.

According to Global Insight’s calculations, prices are now 6.5 percent below their 2007 peak. They fell at a 6.9 percent annual pace affecting 241 of the 330 metropolitan areas analyzed by Global Insight. That’s up from 150 metro areas affected in the second quarter.

Contraction is most severe in the Southeast and Southwest with only the Pacific Northwest remaining overvalued, Global Insight says.

Home prices fell more than 10 percent in the third quarter in nine central California communities. The Central Valley communities of Merced, Stockton, and Modesto have seen property values fall to less than half their 2005 value. Twenty-nine metro areas in California, Florida, and Nevada ­– at one time among the most overvalued – have seen price declines in excess of 30 percent. Similar steep price drops are occurring in Michigan, northeast Ohio, the southern metro areas from Charlotte to Atlanta, as well as in New England.

“Weak economic conditions and wary consumers continue to hold the housing market back. Although many areas are seeing home sales increase, it is largely due to foreclosure homes being snapped up at significantly discounted prices. As the inventory of these homes is removed from the market, prices will remain on a downward path,” predicts Jeannine Cataldi, senior economist and manager of Global Insight’s Regional Real Estate Service.

Then, in the same newsletter, we have the following:
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Posted by Steve
7 years ago