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Ira & Carol Serkes
Pacific Union RE
Berkeley, CA USA


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Tuesday, February 12, 2008

Median Home Prices in the San Francisco Bay Area

The above map is a link from the San Francisco Chronicle article "Zillow maps ups and downs of housing prices"

Zillow gives "zestimates" and all real estate is local. That's one of the reasons I'm no fan of Zillow or their zestimates. Two homes side by side can have vastly different values, as can similar homes put on the market at two different times. As far as I can tell, Zillow doesn't talk about market "temperature"

But I was trained as an engineer, and I think the methodology of aggregating that data by neighborhood or region (it's hard to tell from the map) is an interesting one and has merit.

And it pretty well describes what I've been telling buyers for the past few weeks. Well priced homes in Berkeley, Kensington and Rockridge have been receiving 3 to 7 offers, and selling for significantly over asking price.

However, if you go 5 miles from those desireable locations, the situation changes. Many homes are figuratively under water (worth less than their loan balance) or would be literally under water (SF Bay is just a few miles west of our Thousand Oaks home)

Zillow themselves describes why I'm no fan of using their site to determine value... "In the Bay Area, 35 percent of home sales come within 5 percent of the Zestimate, while 61 percent of sales come within 10 percent"

Let's put that in dollars and cents sense.

The median (half sold for more, half sold for less) sales price in for a 3 bedroom home in Berkeley's Thousand Oaks, Berkeley Hills & North Berkeley neighborhoods was $875,000.

In Elmwood/Claremont, it's $1,185,000.

The Data Source: East Bay Regional Data/BerkeleyMLS Sales of 3 bedroom homes 1 Jul 2007-31 Dec 2007. The MLS doesn't show all home sales, that's why I like Zillow's method of using County Sales information.

So... by using Zillow to decide value, a Berkeley home seller or buyer in these wonderful neighborhoods has a 61% chance (almost 2/3) of mispricing their home by up to 10% .... $87,500 to $118,500.

And a home seller or buyer who decides to be unrepresented, or represented by an agent who's prime benefit is that they sell homes for less, does so to reduce their costs by few percent of the purchase price.

The risk of selling too low, or paying too much, dwarfs the potential benefits.

So.. if you're selling, or buying.... we specialize in getting our clients the best possible deal!

That's such a good idea, I can use it as a book title. In fact, I did!

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At 11:09 PM, Blogger Drew Meyers said...

Hey, it's Drew from Zillow. Zestimates are definitely just a starting point; they are not a replacement for an appraisal or CMA. I'm glad to hear that you see the value in Zindex (the median zestimate within a given geographic area) trends. While we're most known for Zestimates, I actually think the Zindex is the hidden gem on our site.

Thanks for writing.


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