The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: shanghaiMMM on March 18, 2015, 06:16:26 AM
-
Might seem a daft question, but I'm looking into a future possibility of moving to the States and I'm using Zillow to help me. However, there are some things that I don't understand, mainly the incredibly low prices of some houses. Maybe the houses are just cheap, but is there something I'm missing here? I'm looking at Oregon at the minute, but I've seen this for other places too.
Obviously I realise a combination of area/school district/quality of house can all affect prices, but some vary hugely from the 'Zestimate':
$25,000 vs $170,000 Zestimate
http://www.zillow.com/homedetails/13045-SE-Stark-St-UNIT-144-Portland-OR-97233/2103732455_zpid/ (http://www.zillow.com/homedetails/13045-SE-Stark-St-UNIT-144-Portland-OR-97233/2103732455_zpid/)
$39,000 vs $241,000 Zestimate
http://www.zillow.com/homes/for_sale/Portland-OR/house,condo,apartment_duplex,mobile,townhouse_type/2131077741_zpid/13373_rid/0-100000_price/0-366_mp/45.6798,-122.3489,45.403271,-122.960014_rect/10_zm/1_fr/ (http://www.zillow.com/homes/for_sale/Portland-OR/house,condo,apartment_duplex,mobile,townhouse_type/2131077741_zpid/13373_rid/0-100000_price/0-366_mp/45.6798,-122.3489,45.403271,-122.960014_rect/10_zm/1_fr/)
I find lots of houses like this, is there something obvious, as an outsider, I'm missing? Thanks!
-
Those are mobile homes/trailers, but Zillow doesn't realize it. I don't know how many of these you have in the UK, but in the USA a cheap rural form of housing is a mobile home in a "trailer park". The house is manufactured elsewhere (often to high structural standards), put on a flatbed truck, and driven to a large plot of land whose owner rents out portions of the land and allows the tenant to hook up to utilities. That rent is the "space rent" at the end of the description of your second link (also, $630/month? That is big!). The buy-in price for mobile homes is low, but lot rent can be high and financing is difficult to achieve. They are not considered nice neighborhoods, though as with any housing type there's variation.
Here's (https://www.google.com/maps/@40.542768,-75.633884,3a,75y,156.25h,73.26t/data=!3m4!1e1!3m2!1sUqFckgckvW07k-X2MxjYXA!2e0) a street view of a trailer park near me.
In general I have given up on using Zillow because the listings are inaccurate, out of date, and Zestimates are nearly worthless. In my town Zillow has half of the actual listings, and the Zestimate for my house is lower than surrounding houses despite my house having been completely redone, with an extra full bathroom added, in the last five years - and these are houses from the 1910s. In some places, like Houston, Zestimates are just the value assessment the local government uses to determine property taxes. Redfin.com is a much better site if it's active in the areas you're looking. It doesn't assign values to houses, but Zillow doesn't do that effectively anyways.
-
Zillow is a regression model with a time series component to pedict real estate prices, which is much more useful on the aggregate level than on the individual decision level.
Let's say their formula averages the insanely high R- Squared of .5 that means only 50% of the variances in home prices can be explained by the factors they are considering. Even with this high R- Squared value, the standard error is off the charts (meaning that we are perhaps confident that 95% of observations fall within +/- 75% of the median predicted interval)
Y (Predicted Value)= a(size of house)+ b(number of bathrooms)+ c(number of bedrooms) + d
Where values a, b, c, and d are estimated at the "neighborhood level" over the past 4 years.
As you can see, there is no real estimate for the quality of the home itself, or other measurable attributes such as the presence of an HOA, whether you rent the lot, specific proximity to resources (that should be taken care of in a, b, c and d, but often isn't), etc.
Zillow is very useful for specing out neighborhoods, and to gain trend knowledge, but its not useful for picking individual winners/losers. Well, I suppose you can use the picture function for that, but thats not the prediction portion.
-
Zillow prices are next to useless, because the data Zillow has to work with just isn't sufficient (no idea what condition houses are in, for example, even if they're comparable square footage and feature-wise) and there's a lot of subjective stuff (neighborhood desirability) that a real CMA/BPO will pick up.
So don't get too hung up on it. Look at actual listings and asking prices for places that are for sale and ignore the Zestimate.
-W
-
Zillow prices are next to useless, because the data Zillow has to work with just isn't sufficient (no idea what condition houses are in, for example, even if they're comparable square footage and feature-wise) and there's a lot of subjective stuff (neighborhood desirability) that a real CMA/BPO will pick up.
So don't get too hung up on it. Look at actual listings and asking prices for places that are for sale and ignore the Zestimate.
-W
Zillow estimates are only as useful as the data that they're scraping, often from public sites. Their estimate for my house is a bit on the high side, but that's not surprising considering that they think I have one more bedroom that I do, and that the garage that was torn down during the Reagan administration is still standing.
-
This is why I love this place: Specific reasons why the houses in question have low prices and mathematical formulas to show why Zillow estimates are not much use.
Re: trailer parks - I know they don't have a good rep in the USA but I guess I've never seen them - I envisioned movable trailer on wheels. Good to know!
Thanks guys!
-
Re: trailer parks - I know they don't have a good rep in the USA but I guess I've never seen them - I envisioned movable trailer on wheels. Good to know!
Some of them are quite nice. A friend of mine and his wife lived in one for a couple of years while they were saving for the down payment on a house; it was all neatly kept homes, mostly owned by retirees.
-
This is why I love this place: Specific reasons why the houses in question have low prices and mathematical formulas to show why Zillow estimates are not much use.
Re: trailer parks - I know they don't have a good rep in the USA but I guess I've never seen them - I envisioned movable trailer on wheels. Good to know!
Thanks guys!
There are trailer parks in the UK. I just forget what they are called. Mobile home parks, I guess. http://www.mobilehomes-uk.co.uk/park-homes/
Just remember, if you look in the North East or North West of England, there are cheap houses. Not dirt cheap like some in various parts of the US, but cheap compared to the South East. Also, check out rural Wales!
Thing is, the ones in the UK might be stone built, slate roof, will need very little repair ever. The ones in the US will be timber frame with asphalt shingle roof. And, of course, the US is a large place - with lots and lots of large towns and small cities.
Compare London to New York, Los Angeles. But there are hundreds of... oh I don't know, Leighton Buzzards, Milton Keynes, Harlows - except they are NOT within commuting distance of London. There is no "I'll jump on the train and be in central London in an hour" - more like "I'll get in the car and drive for a couple of days".
-
This is why I love this place: Specific reasons why the houses in question have low prices and mathematical formulas to show why Zillow estimates are not much use.
Re: trailer parks - I know they don't have a good rep in the USA but I guess I've never seen them - I envisioned movable trailer on wheels. Good to know!
Thanks guys!
There are trailer parks in the UK. I just forget what they are called. Mobile home parks, I guess. http://www.mobilehomes-uk.co.uk/park-homes/
Just remember, if you look in the North East or North West of England, there are cheap houses. Not dirt cheap like some in various parts of the US, but cheap compared to the South East. Also, check out rural Wales!
Thing is, the ones in the UK might be stone built, slate roof, will need very little repair ever. The ones in the US will be timber frame with asphalt shingle roof. And, of course, the US is a large place - with lots and lots of large towns and small cities.
Compare London to New York, Los Angeles. But there are hundreds of... oh I don't know, Leighton Buzzards, Milton Keynes, Harlows - except they are NOT within commuting distance of London. There is no "I'll jump on the train and be in central London in an hour" - more like "I'll get in the car and drive for a couple of days".
Yes very true, all good points.
I went to university in Sheffield and would love to move back there one day perhaps, as I know housing is still reasonable up there and it is in a beautiful part of the country.
-
This is why I love this place: Specific reasons why the houses in question have low prices and mathematical formulas to show why Zillow estimates are not much use.
Re: trailer parks - I know they don't have a good rep in the USA but I guess I've never seen them - I envisioned movable trailer on wheels. Good to know!
Thanks guys!
There are trailer parks in the UK. I just forget what they are called. Mobile home parks, I guess. http://www.mobilehomes-uk.co.uk/park-homes/
Just remember, if you look in the North East or North West of England, there are cheap houses. Not dirt cheap like some in various parts of the US, but cheap compared to the South East. Also, check out rural Wales!
Thing is, the ones in the UK might be stone built, slate roof, will need very little repair ever. The ones in the US will be timber frame with asphalt shingle roof. And, of course, the US is a large place - with lots and lots of large towns and small cities.
Compare London to New York, Los Angeles. But there are hundreds of... oh I don't know, Leighton Buzzards, Milton Keynes, Harlows - except they are NOT within commuting distance of London. There is no "I'll jump on the train and be in central London in an hour" - more like "I'll get in the car and drive for a couple of days".
Here's (https://www.redfin.com/PA/Easton/1235-Spring-Garden-ST-18042/home/59079822) an $80,000 house a 1.5 hour bus ride from New York City. It's pretty decent on the inside, too.
-
This is why I love this place: Specific reasons why the houses in question have low prices and mathematical formulas to show why Zillow estimates are not much use.
Re: trailer parks - I know they don't have a good rep in the USA but I guess I've never seen them - I envisioned movable trailer on wheels. Good to know!
Thanks guys!
There are trailer parks in the UK. I just forget what they are called. Mobile home parks, I guess. http://www.mobilehomes-uk.co.uk/park-homes/
Just remember, if you look in the North East or North West of England, there are cheap houses. Not dirt cheap like some in various parts of the US, but cheap compared to the South East. Also, check out rural Wales!
Thing is, the ones in the UK might be stone built, slate roof, will need very little repair ever. The ones in the US will be timber frame with asphalt shingle roof. And, of course, the US is a large place - with lots and lots of large towns and small cities.
Compare London to New York, Los Angeles. But there are hundreds of... oh I don't know, Leighton Buzzards, Milton Keynes, Harlows - except they are NOT within commuting distance of London. There is no "I'll jump on the train and be in central London in an hour" - more like "I'll get in the car and drive for a couple of days".
Here's (https://www.redfin.com/PA/Easton/1235-Spring-Garden-ST-18042/home/59079822) an $80,000 house a 1.5 hour bus ride from New York City. It's pretty decent on the inside, too.
Sure, I was speaking generally. $3k property tax though, ouch!
-
This is why I love this place: Specific reasons why the houses in question have low prices and mathematical formulas to show why Zillow estimates are not much use.
Re: trailer parks - I know they don't have a good rep in the USA but I guess I've never seen them - I envisioned movable trailer on wheels. Good to know!
Thanks guys!
There are trailer parks in the UK. I just forget what they are called. Mobile home parks, I guess. http://www.mobilehomes-uk.co.uk/park-homes/
Just remember, if you look in the North East or North West of England, there are cheap houses. Not dirt cheap like some in various parts of the US, but cheap compared to the South East. Also, check out rural Wales!
Thing is, the ones in the UK might be stone built, slate roof, will need very little repair ever. The ones in the US will be timber frame with asphalt shingle roof. And, of course, the US is a large place - with lots and lots of large towns and small cities.
Compare London to New York, Los Angeles. But there are hundreds of... oh I don't know, Leighton Buzzards, Milton Keynes, Harlows - except they are NOT within commuting distance of London. There is no "I'll jump on the train and be in central London in an hour" - more like "I'll get in the car and drive for a couple of days".
Here's (https://www.redfin.com/PA/Easton/1235-Spring-Garden-ST-18042/home/59079822) an $80,000 house a 1.5 hour bus ride from New York City. It's pretty decent on the inside, too.
Sure, I was speaking generally. $3k property tax though, ouch!
Yep. Income taxes are far lower for PA residents than in New York or New Jersey, though, at least at the high end. Not sure how it works if you commute across state lines. I try to avoid weird tax situations like that.
-
Property taxes in NY are the highest in the states, because counties in NY pay for a large portion of Medicaid. To add to this, wealthy landowners typically get exemptions (agriculture or land conservancy) which transfers the costs to the average homeowner. We have exemptions for farmers, veterans, teachers, public service employees, elderly, blind and disabled, etc. This is why, when you look to buy in NY , knowing the "true" (ie, not discounted) property tax is really important. Anyone with 100+ acres of land can get an agriculture exemption fairly easily.
By way of example - a farmer with 400 acres of land and a $1m+ house in my county pays about $8,000 a year in property taxes under an agricultural exemption. A house on 2 acres bordering that property worth $300k pays $13,000 a year.
-
Property taxes in NY are the highest in the states, because counties in NY pay for a large portion of Medicaid. To add to this, wealthy landowners typically get exemptions (agriculture or land conservancy) which transfers the costs to the average homeowner. We have exemptions for farmers, veterans, teachers, public service employees, elderly, blind and disabled, etc. This is why, when you look to buy in NY , knowing the "true" (ie, not discounted) property tax is really important. Anyone with 100+ acres of land can get an agriculture exemption fairly easily.
By way of example - a farmer with 400 acres of land and a $1m+ house in my county pays about $8,000 a year in property taxes under an agricultural exemption. A house on 2 acres bordering that property worth $300k pays $13,000 a year.
Fucking bonkers, innit (pardon my French). Special interest groups... really does my head in. I own a couple of rentals in TX - if you live in the house you own, you get a homestead something or other, and end up paying $80 or so, vs $900 in tax!
So many companies make stuff free for veterans... I have nothing against people who have been in the military (not that I have anything *for* them, either - it's a career choice), but really, credit card fees waived? Don't like it.