How much for that little house in Santa Monica?

The answer to the earlier pop quiz on the house at left: The Zillow Zestimate for this three-bedroom, one-bath home in Santa Monica 90405: $917,000.

Of course, that doesn't mean the house is worth that much, or would sell for that much. It just means that, based on the most recent comps in that neighborhood, and the size of the house -- 933 square feet -- and the lot, that's the Zillow computer's best bet.

When and if prices start to fall in this neighborhood, the Zestimates will fall too.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: L.A. Times

Comments

[Fred]

Not to knock Zillow's Zestimates, because in many ways they are already a dead horse, but they were always inflated even back in '06.

[kosher krab]

It's a good thing that Jed Clampet struck black gold when he did and not in 2008 - Imagine this being the backdrop for the millionaire's house. Granny and Ellie May and the cow would all have to share a room.

[Inland Empire]

It has to be worth at least that much with the handicap access ramp and the custom landscaping.

[hp12c]

Zestimates, as has been well discussed, are an absolute joke... they are a digital extension for real estate industry misinformation. Just look at the number of times the zestimate is much higher than the list price...

[jed]

bottom predictions for this lovely little slice of los angeles?

$400,000

[Jackie]

Zillow's estimate is at least 150K - 200K overflated in my neighborhood - woodland hills.

[John]

Peter,

How about a piece on how buying real estate over the past few years has been extremely similar to buying stocks on margin, the issue that (among others) kicked off the Great Depression?

Basically, uninformed investors were allowed to buy an overpriced product (stocks then, houses now), using the banks to leverage their investment to ridiculous levels (5% down means the bank's on the hook for 95% of the investment), and then got upside down on their investments and ended up owing far more than their initial investments, causing 100+% losses.

[Laker]

Well, I was correct in my guess on the zillow estimate.
AND i think I'm correct on my estimation of the actual value (what it will be worth) when all the dust settles.
To repeat, It will be worth $250,000-20,000 demolition and recycling costs = $230,000 for the dirt.

[Laker]

Jackie, i agree.
Zillow zestimates are overinflated by about 20% in woodland hills. So assuming you are looking at $1,000,000 zestimate, the house value (what it can sell today for) is about $800,000. And that is optimistic.
What drives me crazy is the house X was just sold for $500,000. and Zillow says it is worth $750,000...
Please pay attention David G from Zillow.
The house is only worth what the buyer is willing to pay. SO if house X just got sold for $500,000, the zestimate should be $500,000 (and based on today's trends, probably lower)
I love zillow and the way it provides information. You can look at the zestimates over time like the graphs, and just pick up the general shape, the actual number need to be "normalized" by about 0.8 factor.
I believe that as we get closer to the bottom, the zestimates will converge to true value. and then, start to "under show" the actual value.
I also think, that when zillow zestimates will show exactly the value of the house - it would be the time the market hit bottom more or less.
One that watches this from the side might smell some NAR/NAHB pushing in zillow numbers....maybe, or maybe not...

[GDC]

Here's why Zillow is inaccurate. If you look closely many recent sales have an * by the price. That means that it was not used as a true comp. Their definition of * is that the price is so "off" that it is not used (insider family sale, trustee sale, etc). All of the foreclosure prices have *. If the recent sale is off by, say, 30% from the 05-06 peak it will have the *.

They have no problem using a $1.5 million sale in 06 (from say $500k in 02) as a comp, but they will completely ignore a drop of that house to $1.1million sale in 08. Complete fraud.

Of course, they are doing this to make the current listings seem like bargains. Kinda like what department stores do with "sugg. retail price" and the "sale" price. Unfortunately, it works.

[Bob]

Zillow just doubled the value of all the houses in our area of in Santa Barbara. It had tracked close to 20% high, then all of a sudden in Feb or March, all the houses in our area doubled.

Check this house, actually worth about 1.6-2 mil (or less these days). Next to the park but behind another house, no view. Nice area.

Check out the 5 year graph, shows 3x in 3 year. Not! I think it actually sold last year for 2.1M or so. It was listed for 2.1 or 2.2.

50 El Cielito Rd Santa Barbara CA 93105

[Cal]

OT: Homebuying expo at the Convention Center drew an estimated 5k people over 2 days. The Erotic LA gets that big of crowd in about 5 minutes. I mean.. uhh.. so i've heard.

http://www.car.org/index.php?id=Mzg0MzU=

[Not cuttin anymore]

The thing is, there are so many people in LA out there just like the commentors on this blog that are waiting to buy. Evetually these same people will throw up their hands and and buy realizing that the market will not drop like so many people hope. The only thing, we as sellers need to do is hold firm on our asking prices. who will break first?

[peteviles]

Hey, not cuttin anymore, thanks for posting. I'd love to hear more from you. Drop me an email at peter.viles@latimes.com if you want to blog a bit more about your thoughts.
Pete

[Steve]

$900K for ths dive in the Santa Monica slum, time to move out of state as fast as you can.

[Rich]

I'm not sure who Zillow considers their target audience, but their secret formula is more frustrating than enlightening. I think their public would be happier with some kind of formula for homes with no recent sale that simply takes the taxed value (since most municipalities are taxing a percentage of the value, you add the missing percentage to come up with a whole-house price) and then subtract the Case-Shiller (or some other reliable) index decline from the tax valuation date. older assessments can be massaged to their highs for the missing years by increasing the price according to their corresponding Case-Shiller numbers before subtracting for the decline. The numbers would be a fairer picture of the market than what they're doing now. Heck, even using ASKING prices for comps which include price drops would give a more real picture than sale comps when we've got so much inventory stacking up everywhere...

[bitter MDR renter]

Not cuttin anymore wrote: "The thing is, there are so many people in LA out there just like the commentors on this blog that are waiting to buy. Evetually these same people will throw up their hands and and buy realizing that the market will not drop like so many people hope. The only thing, we as sellers need to do is hold firm on our asking prices. who will break first?"
---

IMO a pretty healthy dose of wishful thinking on your part given where the economy is and where many estimates have it going over the next 2 yrs. Your approach assumes there are many more sellers who are looking to sell out of choice rather than out of necessity. These days there are a lot more people in the latter category, and that's why what you're suggesting isn't going to work well enough to keep the overall market afloat.

[the probelmwithcairng]

For your sake, please be a troll "Not cuttin anymore"
lol

[Corntrollio]

12:58 -- that's cute. Good luck. I'm sure not selling your houses at lower than a ridiculous price will work really well. I'm sure market forces don't affect you at all.

[Jim-Bob Jones]

Hey Not cuttin anymore, I bet that worked really well back in the early to mid 1990s! Maybe you should learn something about the housing market before you comment.

[peter m]

Looks like a typical Compton bungaloo row house which might fetch $150,000. Would'nt U know they have Shotgun rowshacks in Santa Monica: sunny liberal-socialist breezy trendy SM where crapshacks like these are 'zestimated" at $900,000.

Zillow zestimates are S*t.

Actually the real truth is there are a lot of these old squat bungaloo shackarros IN SM over by Pico and just east of ocean ave., Probably more like these in the parts of SM just off Lincoln and south of 10 fwy. Quite a bit of flippings, remodels , teardowns, conversions in these parts Of SM, which when U get down toward northern edgy Venice fix & flip district becomes an actual 100% flip hood, where investors/neighborhood destroyers made off like Bandits doing the flip thing, selling restored 2/1 0r 3-1 1000-1500 sq ft 80yr old craftmans or replacement shacks for A cool million.

This is a slight variation of what has been going on all over the LA crapburgs such as lennox, Scentral, inglwood, west &.central long beach & east & cent SVF. Entire older hood homes being torn out and in their place is plunked down an eyesore 3000 sq ft pillbox
Or a 6000-7000 lot or adjoining two being replaced by a 4-10 unit McCondo complex.

[E]

who can last longer 12:58?

We buyers can.

We don't have adjustable rate mortgages.

How's the feeling in your gut (as a seller) as the time draws nearer and nearer for your payment to reset yet you still haven't sold your house?

Must suck to be you.

Sure...we renters may have to live in the same recessionary economy. Just like all the REALTORS claim.

We are all in this shit together.

Except we renters are ankle deep, while you homeowners are up to your necks and still sinking by default.

[dwr]

"The only thing, we as sellers need to do is hold firm on our asking prices. who will break first?"

Who will break first? The banks, of course, and you sellers will be hosed.

[Laker]

Not cuttin anymore wrote: "...The only thing, we as sellers need to do is hold firm on our asking prices. who will break first?..."

Not cuttin anymore, The BIG problem is that you forget one thing. It seems that you suggest that there are millions of people in LA with CASH that just sit and wait, wanting to buy all these houses....
I agree that the demand is high, yes many people want to buy a house, HOWEVER, these people either can't get mortgages or can afford to buy these houses....
So a lot want to buy your house, but very few if at all can....
SO, my friend, if you want to get top dollar, you should reduce your asking price every week (or day) until you find a buyer willing to pay it. Otherwise, you are going to foreclosure....

[shockg]

Laker, why dont you take your big pile of cash you made by selling your families primary residence and buy a house in a cheaper part of the country. I bet you can find a place to buy where prices are 3X the median income. You obviously don't think you should pay a premium to live in one of the most desireable places in the US.