Zillow Is Peddling Some Real Nonsense, Again!

The real estate news can no longer sell a coming crash, it is both exhausted and no longer gets attention. So, what does the real estate press promote? Mostly nonsense. 

Before we get into that, let's, as always, start with the data.

Mortgage rates closed at 6.34%, about the same as it has trended most of this year.

Inventory: nationally, housing stock continues at record lows for periods other than during the Pandemic, and has declined to match the rates of 2021. As I have repeatedly said, as long as inventory is low prices cannot go down much.

Locally, in Los Angeles, the market continues to be a seller's market, holding at a market action index of 41, the same as last month.

So, are housing prices going to crash?

The data is starting to show after a significant concession over the past 6-9 months, the market is returning towards a more regular level of incremental increases. Black Knight's Housing Price Index increased in February and remains positive for the past 12 months at 1.9%.

Redfin shows that home buyers have increased their interest in buying nationally, showing that homebuyer demand is still 30% over the January 2020 pre-COVID level.

The elephant in the residential real estate market is Zillow, by far the largest company in the space, an amazing feat for a company that was launched in 2004, less than 20 years ago. When it was founded, its concept was to use data to disintermediate the real estate market and to empower consumers at the expense of the rest of the industry. On their way to becoming the gorilla in the industry, they have become nothing more than another advertising company that, in my professional opinion, misleads customers and takes advantage of them by selling their data.

Recently, Zillow agreed to a $15 million settlement on a class action lawsuit brought BY ITS OWN SHAREHOLDERS as a result of a program they ran where mortgage lenders paid for real estate agents to advertise on Zillow. The Consumer Financial Protection Bureau, the same clowns that have watched banks fail and cryptocurrencies perform the greatest frauds in American history, found nothing in their investigation. Really, Zillow agrees to pay $15 million but did nothing wrong? This system is so crooked.

This week's award for the worst real estate news goes AGAIN to Zillow. This week, it's for their press release titled "She sheds, steam ovens can help sell homes for up to $17,400 more." This "research" is so worthless that they do not actually put it on their website, but pass it out to other media sources who run it for them, and a quick review shows it reprinted in the Daily Mail, Yahoo, USA Today, and hundreds of other news sources.

So let's break down this "research."

1st, they claim that steam ovens, which use steam instead of hot air or oil to cook food, contributed to the top sale premium of 5.3%. If you do the math in their article, where steam ovens raise the sales price by $17,400 or 5.3%, you can determine that $17,400 is 5.3% of $328,000. So, they are telling you that if you have an average $328,000 house and put in a steam oven, which retails for about $6-9,000 you will earn an extra $17,400. Does that even make sense? Of course not. It's because any home with a steam oven also has other high-end features that together, in my experience cost way more than the $17,4000 gain. The best source for both the cost and resale value of such projects is Remodeling Magainze, a resource for the remodeling industry, and their research shows that an average kitchen remodels of $26,790 will only return about $22,963. Hardly a profit, really more of a way for a homeowner to enjoy the remodel and then sell and recoup some of the costs.

Let's look at a second ridiculous claim by Zillow. At the top of the release, right below the title, is the headline "Zillow finds that doorbell cameras and soapstone countertops can help sell a home up to 5 days faster." OK, so if you buy and install a $200 doorbell camera, as I have from Ring, you will sell a home 5.1 days faster. Is that really what they believe? If it was true, it would be the biggest trend in real estate ever. Every seller would just install a camera and demand a discount i the real estate agent listing commission, and if it really worked, it would be worth it. 

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Bill Gross, The LAProbate Expert
I am a real estate broker in Los Angeles, CA focused on probate real estate and the leader of a team of over 1,100 agents nationally probate experts.

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