Zillow vs. Reality: Home Value Comparisons

In addition to breaking out our data geographically, we also studied the impact that a home’s real value has on Zestimate® accuracy. Between January 16, 2019, and June 14, 2019, we recorded 532 home sales in the Tri-Cities. The data below reflect all Tri-Cities home sales that we tracked.

Median Error Rate

Median error rate is the primary metric that Zillow uses to gauge the accuracy of Zestimates®. In late January 2019, Zillow said its median error rate nationwide is 4.5 percent. That means half of all Zestimates® are within 4.5 percent of the actual sales price.

We previously showed that the median error rate of Zestimates® in the Tri-Cities is 5.6 percent, that Pasco has the lowest median error rate and West Richland has the highest. But we wondered how the error rate changes across different home value ranges.

Based on our research, Zestimates® are significantly more accurate in what we would consider the lower mid-range of Tri-Cities home prices. Homes that sold for between $225,000 and $299,999 had a median error rate of 3.3 percent — meaning the Zestimate® for half of those homes was within 3.3 percent of the sales price.

By comparison, homes in the upper mid-range ($300,000 to $399,999) and on both extremes (below $225,000 and above $400,000) had Zestimates® with much higher median error rates. Half of all homes that sold above $400,000, for example, had Zestimates® that were more than 7.5 percent wrong. Half of all homes that sold below $225,000 had Zestimates® that were more than 6.5 percent wrong.

Are Zestimates® Too High or Too Low?

There was not a significant correlation between the sales price of a home and whether its Zestimate® was too high or too low. Based on our research:

• Homes that sold for less than $225,000: 77 percent of Zestimates® were higher than actual sales price
• Homes that sold for $225,000 to $299,999: 73 percent of Zestimates® were higher than actual sales price
• Homes that sold for $300,000 to $399,999: 85 percent of Zestimates® were higher than actual sales price
• Homes that sold for $400,000 and above: 86 percent of Zestimates® were higher than actual sales price

Range of Zestimate® Inaccuracies

On its website, Zillow measures how many Zestimates® are more than 5, 10 and 20 percent wrong. We’ve done the same thing with our Tri-Cities data, presented here based on home value.

The data again show that homes in the $225,000 to $299,999 had the most accurate Zestimates®. In this group, only 40 percent of homes had a Zestimate® that was at least 5 percent wrong and only 4 percent had a Zestimate® that was at least 20 percent wrong.

The data also suggest that homes that sold for $300,000 to $399,999 had the most inaccurate Zestimates®. In this price range, 62 percent of homes had a Zestimate® that was at least 5 percent wrong and 41 percent had a Zestimate® at least 10 percent wrong — both of those are the highest among the four price ranges shown above.

(Note: percentages in each price range add up to more than 100 percent because a home with a Zestimate® that was 20 percent wrong is counted in each column.)

Zestimate® Accuracy & Inaccuracy in Dollars

When we look at how many Zestimates® were within $5,000, $2,500 and $1,000 of the actual sales price, we see more evidence that Zestimates® are less accurate as home prices go up.

Based on our research, homes that sold for less than $300,000 were more likely to have Zestimates® that were within a few thousand dollars of the sales price.

By comparison, only a small percentage of homes that sold above $300,000 had Zestimates® that were within a few thousand dollars of the sales price.

Navigation

1. Zillow vs Reality: Introduction
2. Zillow vs. Reality: Key Takeaways
3. Zillow vs. Reality: All Tri-Cities Zestimates®
4. Zillow vs. Reality: Kennewick Zestimates®
5. Zillow vs. Reality: Pasco Zestimates®
6. Zillow vs. Reality: Richland Zestimates®
7. Zillow vs. Reality: West Richland Zestimates®
8. Zillow vs. Reality: Home Value Comparisons (this page)
9. Our Methodology