Homeowners, investors, and real estate professionals wondering where home prices are headed now have a tool from Zillow, released Thursday, that estimates the future value of individual homes.
The Zestimate forecast, created by real estate and home-related online marketplace Zillow, predicts the estimated change in a home’s value in a 12-month span in both dollars and percentages.
Zillow’s example is of a house with a current “Zestimate” of $200,000. The forecast for that home in one year’s time might be $210,000, translating to a Zillow prediction that the home’s value will increase by 5%.
Consumers and real estate professionals can use the tool to better understand how local housing trends can affect the future value of specific properties, Zillow says. The forecast adds an additional layer of information to Zillow’s real-time database of homes, including “rich data,” Zestimates, and Rent Zestimates on more than 100 million homes across the country.
“When Zillow first launched its Zestimate home valuation in 2006, we introduced an important layer of transparency to the real estate market to empower consumers to make better decisions,” said Zillow Chief Economist Dr. Stan Humphries, who created the proprietary Zestimate algorithm. “Today, Zillow lets you see historical Zestimates over the past 10 years, and now the new Zestimate forecast provides a unique glimpse into the future never before possible at the home level.”
Here’s how Zestimate forecasts are calculated: Zillow takes information about each home’s individual characteristics—things like square footage and number of bedrooms and bathrooms—and combines it with local economic and housing data that could impact future home values in a given region.
Data includes the supply of homes for sale, percentage of delinquent loans, population and income growth, and local unemployment rates. The forecasts are updated monthly to reflect changes to local economic conditions along with homes that are updated or undergo improvements.
Learn more about Zillow’s new Zestimate.
Written by Alyssa Gerace