As many of you who follow this blog have read in my other posts, I cringe every time Zillow is cited as a credible source of local real estate market information.
Today in particular I am troubled by the monthly Zillow Market Report emails that I subscribed to some time ago thinking that the more market information I have from more sources the better. Wrong! Largely these seemingly consumer-friendly emails are just some data pretending to be information and what's more they are confusing and misleading.
Zillow's Market Temperature in these reports, measured from "buyer's market/cold" to "seller's market/hot," is completely misleading and bears no relationship to the facts of our metro Boston real estate market and is without definition. See the second column in the table below.
An easy definition a buyer's market is when housing inventory, measured in months of supply, is greater than 7 months. A neutral market is when housing inventory is between 6 and 7 months of supply and finally, a seller's market is when housing inventory drops below 6 months supply.
In a search for understanding and clarity, I've tried to get under the hood of last month's Zillow Market Report emails for Boston's Back Bay, Beacon Hill and South End neighborhoods and for the cities of Cambridge and Somerville, MA. Here's what I've come up with. The table that follows merges Zillow's "information" in column two with data pulled from Unit Realty Group's free Market Insights reports in column three.
You'll see that in each of the five representative real estate markets housing inventories are well below 6 months of supply. By definition this means we're locally solidly in a seller's market, but Zillow sees things differently.
- Back Bay, the market with the most months of housing inventory in our sample, is called out by Zillow as a cold market, and a buyer's market. Really? To call 2.2 months of housing inventory a buyer's market is a disservice to all Back Bay home buyers and sellers.
- Beacon Hill is called out by Zillow as a warm, or neutral market because it has an additional 0.3 months supply of housing inventory over cold/buyer's market Back Bay? That makes no sense at all.
- The South End with its paltry 0.8 months supply of inventory is called out by Zillow rightly as a very hot market, but come on, why not just fill in the bar graph the whole way like Cambridge below it? "Very hot" is very hot.
If you are thinking of buying or selling a home, dont underestimate the role a real estate professional can play in the process. The plethora of data pretending to be information now available online has resulted in increased confusion. As a real estate professional I am always pleased to help connect the dots for my clients in ways big box portals cannot.