I grew up at 4950 Lancaster Avenue My parents purchased it for $7,000 in 1957 or so. They made nothing on it and it is now the hole that you see between the buildings. But they raised seven children there. I lived there from age 3 to age 20 or so when my Dad died. I say it owes them nothing for housing nine people there for 17 years. The entire neighborhood that still exists, only values out at $15,000 max. That’s only a 50% return over a fifty year timeframe. Yes, there are “wrong” places to buy property! Always has been and always will be…ALL property does not go UP! (or down) in equal proportions.
In 1973 when my Dad died, my Mom moved to 6626 Haddington Street I remember her picking up the phone and leaving messages on the answering machines of every real estate office in town. She said I have $8,000. If you have a house to sell for $8,000, call me. According to Zillow, that house has now increased by 470%. My Mom was always a little smarter than my Dad…but my Dad was a cool dude 🙂 I don’t remember exactly what my Mom sold it for in 1980, but I do remember that she got at least double what she paid, had a non-taxable gain AND carried a portion of the price as a mortgage to the purchaser, with a double digit interest rate. That house owes her nothing either.
I moved out by the time she sold that house in 1980. In fact my Mom followed me to Northeast Philly. I rented. She bought a house for $18,000 on Fairdale now valued by Zillow at about $55,000. She sold it for $46,000 or so. It is now worth three times what she paid for it, but she took most of the equity out when she left. I bought this house in Kipling Place in 82 for $45,000 and sold in in 84 or $65,000. Zillow values it at $74,000 now, so looks like I pulled most of the equity out of that one. Me and my Mom seem to be doing pretty good pulling equity out and getting in and out at the right times.
Gotta go and I want to see if these Zillow links last. I’ll pick up in 1985 in another post.
I grew up 3 miles away…!
http://maps.google.com/maps?daddr=4950+Lancaster+Ave,+Philadelphia,+PA+19131&saddr=350+Winding+Way,+Merion,+PA++19066&f=li&hl=en&ie=UTF8&z=14&om=1
What a difference that 3 miles makes though Dan! That’s where my Mom WANTED my Dad to buy…it’s worth $685,000 vs. $15,000 today 🙂
Thanks for proving my point that three miles CAN make a HUGE difference. The difference back then was $7,000 vs. $15,000, today the $7,000 is worth $15,000 and the $15,000 is worth $685,000. Maybe the house she wanted in Merion is only worth $550,000 today…but clearly my Mom had a better brain for real estate than my Dad. He just wanted to live near his Mom and own a record store.
Interesting how Zillow is being received in different areas of the country. On the northside of Chicago, where the majority of housing stock are condos (including a couple hundred highrises), their numbers are pretty far off the mark more often or not–just too many upgrade
variables between otherwise seemingly similar units are in play–and the new feature they added to allow the owners to “upgrade” their value only adds to the inaccuracies. And what isnt a condo, or new const, is teardown– which, as you well know, is another whole tangled up ball of string to try and unravel! Appraisers here are always calling the agents here for help.
Geno,
Condo dwellers, in my experience, are much more turned in to the value of their condo without Zillow’s assistance. Each building is like a small neighborhood where every knows what their neighbor sold for an can adjust thier own units accordingly. I don’t think inaccuracies in Zillow calculations will harm condo owners.
Firstly, The Fed through the Bureau of Labor and Statistics reports capital asset growth for residential real estate on an MSA basis for repeat sales. The data is very credible. The data is used in many studies. The data is available to anyone.
Zillow discloses some information about the accuracy (or inaccuracy) of their data in the FAQs. The disclosure is probably not enough to satisfy a mathematician or statistician. For the most part Zillow is not accurate at all. Most people don’t bother to research the accuracy issue on the Zillow website. In my finance classes, I poll the students. I find that less than 5% of the students know about the Zillow FAQs. But, more than 50% believe the data is inaccurate. I am guessing their opinion of the inaccuracy is probably anecdotal personal experience.
While finance theory (pricing models, etc) applies to all asset classes, real estate has a few unique qualities. The uniqueness comes from the many qualitative components that can not be quantified for an equation or algorithm on such a granular level across all transactions. Zillow is attempting to report on a very granular level. Remember, the BLS reports by MSA. The qualitative components of real estate carry different influences and weight in each MSA. It is impossible to develop an algorithm(s) to accommodate all the uniqueness on such a granular level.
As Zillow states on their website Zillow is a starting point. I think that is pushing it. While Zillow is interesting and I admit to using it, it is nothing more than toy. It is not a replacement for a “good” real estate professional or appraiser. A good real estate professional who knows their neighborhood for residential property should be able to price the property so that it sells at +/-3% of the list price within the average days on market. That is far more accurate than Zillow.
Cheers,
Michael P. Lindekugel MBA
Financial Analyst
RE/MAX Commercial
Team Reba – RE/MAX Metro Realty, Inc
Ardell, What you say is true. It doesnt harm anyone. It just makes the
owners of the least desireable units overzealous when listing time comes around…”but according to Zillow my condo is worth…”
tc,
G