HP shows his dexterity and flexibility doing the limbo

Ask a Zillowite why they love working here, and I think you’d find a consistent theme: The people, the product, and the potential. All of these energize us to do better, be better, take risks and have fun along the way. As the old saying goes, “home is where the heart is.” Let’s face it: we put so much of our energy, time and heart into our jobs, why not strive to work at a place where you love what you do and truly enjoy the people you work with?

Here’s a little glimpse at how we like to take breaks together. This past Monday, we decorated the main hangout space in the Seattle office, turned up the tunes, brought out some yummy food and beverages and had a little Cinco de Mayo fun together. Our newest team member, April (who started just 6 hours before the party), along with our intern, Eli, muscled up and took a swat at the piñata. H.P. then showed us up with his extreme flexibility in the limbo contest. OK, every day is not a party here at Zillow, but while working hard we do enjoy ping-pong breaks, Guitar Hero, a rousing game of darts and, of course, air hockey.

If this looks and sounds like fun to you, while doing a job that you love, please check out our current jobs. We are growing and have some pretty cool opportunities available right now. We think we’re onto something big. Come join us!

Eli draws a crowd for his pinata encounter

The New York Times today has an article on the city of Vallejo, CA declaring bankruptcy. In what the Times calls “a potentially ominous harbinger” for other California cities, the City Council of this northeast suburb of San Francisco voted unanimously, citing no other choice due to dwindling tax revenues and a depressed housing market.

Our Q1 08 Quarterly Home Value Report for Vallejo shows a pretty bleak picture for homeowners. Home values are down 24% year-over-year, and 91% of Vallejo homeowners who bought in 2006 are now in a negative equity situation - owing more than their home is worth. It doesn’t help that the median down-payment in 2006 in Vallejo was 0% — a classic situation where recent homebuyers overextended themselves when they bought during the boom (in contrast, the median down-payment nationwide was 10% in 2006). The graph below shows the exact correlation between a dropping median home value (Zindex), zero down-payments and now widespread negative equity situations for homeowners.

It’s not clear to me what exactly happens when a city declares bankruptcy and how this affects its citizens. The Vallejo Times Herald quotes a city official as saying that they will continue providing city services and the move will allow them to restructure their finances. Meanwhile, it’s a fair bet that other cities facing housing woes and rising rates of foreclosure will be watching what happens closely.

That’s just one of the many things they say in Texas and I’m really happy to announce that Zillow just “went big” with Keller Williams, headquartered in Austin, Texas.  See the release here.  We are proud to announce that Keller Williams has joined the Zillow Listings Feed program and that listings from KW’s 73,000+ associates are now prominently displayed on Zillow, bringing Zillow’s total listings count to 2.1 million.  As you know, Keller Williams is one of the largest residential real estate companies in the U.S. and you will now be able to see their familiar red logo throughout our site.  You’ll also see tons and tons of KW agent profile pages on our site.  In fact, there are more Keller Williams agents with profile pages than any other brokerage in the United States.   Of course, profiles are free (and great ways to market yourself), it’s just that the folks from KW seem to have jumped on this opportunity more aggressively than most.  Check out a couple of the great profile pages I discovered while perusing the site:

http://www.zillow.com/profile/Krismer

http://www.zillow.com/profile/Central%20Texas%20Agent

On a personal note, this deal is particularly fun for me because I now have a built in excuse to get back to Austin, where I once lived. 

Welcome, Keller Williams and Hook ‘em Horns!

A few interesting recent posts by real estate bloggers …

Free Flushes? (Gordon Stephenson)

Flushing constitutes nearly 40% of domestic water usage, so in theory, this will reduce your water (and sewer) bills considerably. And it’s just “light grey” shower water, which if you avoid shaving, toothbrushing, and any other debris-generating activities (not to get too graphic), should be 98% pure domestic water and a little bit of ivory soap and shampoo.

Where is the Breaking Point in the Market? (Ryan Ward)

“The fact of the matter is that housing is not perceived to be affordable and perception is reality. Justified or unjustified buyers feel housing is overpriced and when you couple that with underwriting guidelines that are more strict than in the past few years, affordability looks to be even farther away.”

9 Advantages of Working with A Real Estate Professional Who Blogs (Jeff Dowler)

“You gain insight into what the writer actually knows about their particular role in the real estate business. No one knows everything about their particular field, but what they DO know becomes patently obvious. Not just WHAT they write about … but HOW they write about such matters.”

Long Distance Relationships (Teresa Boardman)

“It is becoming more common in my job to work for sellers that I never meet. We have long distance business relationships. It is more common with condos and lofts than with any other type of real estate. Owners move away and rent out the condo and then decide at a later that they want to sell it.”

If You Can Beat’em, Play Dirty (Ben Kakimoto)

“Well, it appears an agent with a competing condo blog got a little envious and started to play dirty. The agent bought Google Adwords with my name as the keyword search term as well as the title of the ads themselves.”

Turning Away “Business”… (Jay Thompson)

“… what is the point in taking a listing that can not be sold? All three of these homeowners called knowing exactly what price they wanted to list their home for. They were off the mark (on the high side) by $60 – $135K. I tried to help them understand the current Phoenix real estate market conditions. I supplied data, I waxed eloquently about why their homes would never sell at those prices.”

HR 5830- Short Refinances: Saving the US Mortgage Industry? (Brian Brady)

“Wanna try and guess the bottom? Watch the lenders. When short refis are offered, en masse, they think a turnaround is near. ”

What are you reading?

While poking around the cool Quarterly Home Value Report heat map and drilling in closer to the trends in Grand Rapids, Michigan, an interesting-looking home popped up in the little snapshot for Ada, MI (screenshot, above). It is the most popular home in Ada and come to find out, it’s for sale for $1.5 million. Yes, the Zindex for Ada is $249,000, but this house is somewhat special since the architect is Dirk Lohan, who is the grandson of the late Ludwig Mies van der Rohe, considered a pioneer of modern architecture.

According to the listing by the Keller Williams Novosad Team, “This home is probably the best example of international design in West Michigan and is priced hundreds of thousands less than the cost of duplication. The exterior is a simple 42 foot geometric solid while the interior offers a contiguous flow of space over four floors. The magnificent home is settled on 30 acres of beautifully wooded land with 5 of those acres being manicured lawn. Multiple decks. Floor to ceiling glass walls in every room offer a stunning view of the property as does the rooftop deck on the fourth floor.”

It is a gorgeous piece of property and quite a nice acquisition for anyone who wants a home designed by a person from renowned architectural lineage. Plus, home values in Ada have dropped “only” O.3%. Sounds like Ada will have lots of upside once this market stabilizes.

As you saw from Stan’s earlier post, home values continued to slide downward in the first quarter, falling more significantly than any quarter we’ve ever reported – down nearly 8% from a year ago.

Despite this trend and near-endless streams of news coverage on the subject, a lot of homeowners are still bullish about their home’s value. For the second quarter in a row, we released survey results conveying relatively high homeowner confidence that is pretty widely off from the market reality.

According to our survey, 72% of homeowners believe their home’s value has increased or stayed the same in the past year. Wishful thinking? Yes. We actually crunched the numbers and found as of Q1 the reality is: 75% of U.S. homes actually decreased in value from the same period a year ago.

While it seems many homeowners are moving closer to reality as 5% more respondents in Q1 said they think their home value has decreased in the past year than those surveyed in Q4 07, the gap is still surprisingly wide.

Does geography matter?
Homeowners in the Northeast have a better grasp on reality than those in other parts of the U.S. as 27 % of Northeast homeowners believe their home increased in value in the last year, which was in line with the actual increase (26% of homes). While more homeowners in the West accurately believe their home has decreased in value (37%), it’s wildly off from the actual 85% of homes that declined in value in the West the past year.

The map below highlights the break down across regions:

Why the gap?
Homeownership is one of the largest financial undertakings most people will ever experience and we expect there’s a fair bit of denial in these results as homeowners want to believe it’s not their home affected. We certainly hear this from real estate professionals currently working with sellers who insist on setting asking prices at the levels we saw 2-3 years ago. But, we think there’s a fair bit of inattention as well. Some homeowners are simply not paying close attention to the market because they don’t need to – they aren’t in the market to sell, buy, refinance or take out equity.
Zillow User More Aligned with Reality
Meanwhile, we also polled a few hundred Zillow users, asked the same questions and found what we’d likely expect: you are more informed about the real estate market than homeowners at large. In fact, pretty darn close. Based on our data, 19 percent of homes in the U.S increased in value in the past year and 18.8 percent of Zillow users said they believe their home increased in value. While there’s still a gap between Zillow users who believe their home’s value decreased and the market, it is considerably closer to reality than the general homeowner population.

We’re glad Zillow users are taking the initiative to stay informed on the housing market and your home’s value. The world would be a smarter place if everyone did.

One of the regulars in Zillow’s Discussions named SoCalBubbleHead decided to have a little fun the other day and started a game called “Guess the Price of that House.” This is how SoCalBubbleHead started it:

I thought I would try something new. Everyone can post a photo of a house and we can guess how much the asking price is. Be sure to include the location of the house, and some basic facts about it if you wish to play. I will start:

Location: Northern New Jersey
Bedrooms: 5
Bathrooms: 3.5
Year Built: 1960s

Little did SoCalBubbleHead know, there is already a game built off the basic concept of “what is that home worth?” and it’s called “Price Me Now” — available at Realius.com. Realius is an API partner of ours (they are using our GetDeepComps API call) that I covered on Geek Estate Blog in September (actually twice).

At this writing, there were about 12 entries from various contributors with some close price guesses and some not-so-close. But, it was a fun little thread that revealed a wide price-range of homes in various locations. And if you look at this thread and the homes and the prices, it just goes to show you that location IS everything.

Aw shucks! The Webby Awards, which began acknowledging excellence on the Internet since 1996, just bestowed Zillow with the top Webby in the real estate category. Thank you Webbys! We are deeply appreciative and humbled by this recognition.

Come to find out, Zillow was chosen as the overall real estate winner by members of the International Academy of Digital Arts and Sciences, which is a 550-member body of creative power players, including musicians Beck and David Bowie, Internet inventor Vint Cerf, political columnist Arianna Huffington, Real Networks CEO Rob Glaser, “The Simpsons” creator Matt Groening, R/GA Founder and Chairman Robert Greenberg, Virgin Atlantic Chairman and Founder Richard Branson, and The Weinstein Company Co-Founder Harvey Weinstein. Other members also include writers and editors from publications such as The New York Times, Wired, Details, Fast Company, Elle, The Los Angeles Times, Vibe, and WallPaper.

The 11th Annual Webby Awards received over 8,000 entries from over 60 countries and all 50 states and generated over 750 million media impressions worldwide.

Conditions continued to worsen in Q1 as U.S. home values continued their slide down with the Zindex posting a 7.7% year-over-year decline, the sharpest decline we’ve ever seen in our data, which extends back to 1996. Not surprisingly, the market decline brought with it increasing rates of negative equity, with one out of two homeowners who purchased during the national market peak in 2006 currently “underwater” on their mortgage, or owing more on their mortgage than the home is currently worth. Even more alarming is the finding that almost 45% of homeowners who purchased last year (2007) are already underwater on their mortgages, a fact that drives home the rapidity of the market depreciation.

Hardest hit areas in terms of value declines included many parts of California and Florida as well as the metropolitan areas of Las Vegas and Phoenix. The Los Angeles MSA was down 16% year-over-year and down 19% from its market peak in 2006. Values in the Los Angeles area have retreated to levels last seen in fourth quarter 2005, and almost 72% of LA-area homeowners who purchased in 2006 at the market peak, now have negative equity. In the Orlando MSA, prices are down 23% from the market peak in 2006 and down 19% on a year-over-year basis. Among homeowners who purchased at the peak, almost 75% have negative equity in their homes currently.

While we’re clearly in a period of market correction, it’s interesting to note that these large declines are beginning to bring five-year annualized appreciation rates in these markets back down into the range of historical norms. For example, Las Vegas metro posted a 25% year-over-year decline in Q1 2008 but the five-year annualized rate is still 6.5%. The Tampa MSA reported a 17% decline this quarter but still has a 5.5% annualized rate over the past five years. There are, of course, some areas where recent market declines have more substantially dented longer term performance, for example, in Merced, California where the current year-over-year decline is 34% and recent losses have completely wiped out returns over five years (five-year annualized rates of 0%).

There do continue to be bright spots amidst the larger backdrop of widening market deterioration. Many of the bright spots are in the South and Midwest, which for the most part managed to avoid the tremendous, and ultimately unsustainable, appreciation many other parts of the country saw in the first half of the decade. The Charlotte MSA was up 1.8% YoY, Dallas metro was up 1.1% YoY and the Oklahoma City MSA was up 5% YoY. Overall, however, more markets continue to join the ranks of down markets with 130 of the 160 metro areas in our analysis this quarter reporting negative year-over-year performance. Of particular concern is the fact that the magnitude of home value declines has been increasing during each of the last five quarters, a strong indication that home values still have further to fall.

To download graphics and spreadsheets for the national report or one of our 160 local reports, visit http://www.zillow.com/quarterlies/QuarterlyReports.htm.

Now you can add Zillow’s Quarterly Home Value Reports to a blog post just as easily as you can add a YouTube video. All you have to do is cut and paste. We used the Editgrid service to create this portable spreadsheet which includes median home value data, year-over-year changes and market peak info for the top 30 Metropolitan Statistical Areas.

3 easy steps to add this spreadsheet to a blog post:

1) Click on the (down) arrow in the top left corner.
2) Click on “Embed Code” and select and copy the code.
3) Paste the code into your blog post, click publish and voila!

Enjoy!

PS … If you like this idea and want an embeddable spreadsheet to drill down on home values in any of the 160 MSA’s in our reports, please leave a comment and we’ll try to whip something up for you.

Update 5/6: If you want to create your own spreadsheet and embed it on your blog, Drew just wrote a “how-to” post at Geek Estate Blog.

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