Zillow Talk: Rewriting the Rules of Real Estate

by Spencer Rascoff, Stan Humphries

How do you spot an area poised for gentrification? Is spring or winter the best time to put your house on the market? Will a house on Swamp Road sell for less than one on Gingerbread Lane? The fact is that the rules of real estate have changed drastically over the past five years. To understand real estate in our fast-paced, technology-driven world, we need to toss out all of the outdated truisms and embrace today's brand new information. But how?

Enter Zillow, the nation's #1 real estate website and mobile app. Thanks to its treasure trove of proprietary data and army of statisticians and data scientists, led by chief economist Stan Humphries, Zillow has been able to spot the trends and truths of today's housing market while acknowledging that a home is more than an economic asset. In Zillow Talk, Humphries and CEO Spencer Rascoff explain the science behind where and how we live now and reveal practical, data-driven insights about buying, selling, renting and financing real estate. Read this book to find out why:

It's better to remodel your bathroom than your kitchen
Putting the word "cute" in your listing could cost you thousands of dollars
You shouldn't buy the worst house in the best neighborhood
You should never list your house for $444,000
You shouldn't list your house for sale before March Madness or after the Masters

Densely packed with entertaining anecdotes and invaluable how-to advice, Zillow Talk is poised to be the real estate almanac for the next generation.

Genres: Nonfiction, Business, Audiobook, Economics, Finance, Self Help, Money

Audiobook

First published January 13, 2015

About the author

Spencer Rascoff is the Chief Executive Officer and a Director of Zillow Inc. (NASDAQ: Z), the leading real estate information marketplace. Spencer joined the company as one of its founding employees in 2005 as Chief Financial Officer and Vice President of Marketing and served as its Chief Operating Officer from October 2008 through his promotion to CEO in September 2010. Under Spencer’s leadership, Zillow achieved record Web and mobile traffic, record revenue and record profitability in 2011, and successfully completed its IPO in July 2011.

Spencer graduated cum laude from Harvard University, and he serves on Harvard University's Digital Community & Social Networking Advisory Group. Spencer is a member of the Young Presidents’ Organization (YPO), and the Policy Advisory Board at the Harvard Joint Center for Housing Studies. Spencer is also on the Boards of Directors of TripAdvisor Incorporated, a publicly traded (NASDAQ: TRIP) travel services company Julep, a privately held beauty brand and Zulily Incorporated, a publicly traded (NASDAQ: ZU) consumer products company. Additionally, Spencer, along with Zillow chief economist Stan Humphries, is the author of “Zillow Talk: The New Rules of Real Estate,” scheduled for release in January 2015.

Reviews

[David Rubenstein · Rating 4 out of 5]

This book is intended for those who want to sell, buy, or rent a home. If you are in one of these boats, then you are probably familiar with the immensely popular zillow.com web site. This web site is one of the first (or perhaps the first) tool that brings enormous banks of information to homeowners and home buyers. Real estate agents used to have a monopoly on real estate information. But this web site allows homeowners/buyers to get lots of good information about homes and neighborhoods. Nevertheless, this book strongly states that although the job of real estate agents has morphed over time, they are still strongly recommended, as their help and advice can be very useful.

This book is not a comprehensive guide to buying or selling a home. Instead, it only deals with the results of data-mining that the authors performed using the vast zillow databases. And, they have found some very interesting things about the valuation of homes. For example, which neighborhoods have the greatest potential for value appreciation?
o Those neighborhoods with houses over 40 years old,
o Neighborhoods with low home-ownership rates,
o Homes near a Starbucks
This may seem somewhat anti-intuitive, but the authors make a good case for these conclusions. For example, by choosing a home near a Starbucks, you are using the help of the heavy-duty market research that the company performs, in locating their branches.

The authors also state that the value of purchasing foreclosures is usually overrated. They are not such a fantastic deal that some people make them out to be.

The book gives some suggestions about how to write a real estate ad, when selling your home. For example, do not ever use the word "unique", because it is a code word for potential problems. If there is a large population of Chinese people who may potentially buy your house, make sure that the last non-zero number in your selling price is the lucky number "8". By all means, make sure that it is not an "4", which is an unlucky number. Otherwise, make sure that the number ends in a "9", for example, $259,000 instead of $260,000. Even though people know that it is a trivial marketing ploy, it really works. The data show that it works.

The authors have some damning conclusions about our lawmakers who try to help people to buy houses. Some American policies that have good intentions--to aid low-income people to grow their wealth by helping them to afford down payments on homes--actually have the opposite effect. These policies actually increase the "divide between the haves and have-nots." The authors write that "equating home ownership and the American Dream is a policy nightmare", and these policies exacerbate the problem of inequality. I won't go into the details of their reasoning--but it seems correct to me.

The authors also discuss the question of whether it is better to buy or rent a home. There is no simple answer here, but the statistics can be a guide, depending on your location, as to whether or not buying is a good financial investment.

So, if you are trying to sell or buy a home, you will get some excellent guidance. But you should not use this book as your only guide. It contains some insightful gems, but it is clearly not comprehensive.

[Antonio · Rating 4 out of 5]

This book is a nice and different tool to understand the behaviour of the residential real estate market in the US. It offers a wide range of facts that aren't normally taken into account when in a transaction of this sort (buy/sell a house).
It is a fresh outlook on how to approach the real estate business and gives the buyer/seller several pointers on what to look for when dealing with a housing investing decision.
My favourite part of the book= all the data that back the assumptions made by the authors. E.g. "name or number"

[Davy · Rating 3 out of 5]

As much as I may like books about start ups, I was thinking this may be more about new problems I may face as a home buyer in a hyper competitive landscape (anywhere in SF Bay Area), but I think due to my extensive scouring of the internet and also talking to my own friends that have experienced how crazy it is, I didn't get as much out of this book as I could have. For instance, in my case, I think I was looking for some advice on buying in a inflated seller's market.

One thing I will give Spencer is that he knows how to sell his product, and pitch Zillow as the definitive source for home valuation for consumers, and I certainly learned about that via the multiple pitches in this book.

Do your homework, use Zillow, the rules have changed. There you go.

[Yodamom]

If you are thinking of buying or selling a home you need to read this book. Do not go into such a huge investment at the merry of another persons input alone. this book is filled with all kinds of hints of what to look for in your next investment or what to focus on when selling. I found it fascinating and wish I had read it 20 years ago after dealing with some less then helpful agents and losing money

[Rolando Gill · Rating 2 out of 5]

Not a good book. Just dumb. Written in the style of Freakonomics. Taking each chapter to expound on a subject totally unrelated to other chapters in the book. From the words to use in describing your listing to explaining how New York real estate is different to shaming waterfront property buyers because they keep buying waterfront homes even though the seas are rising. The authors feel pretty good about their web traffic, and they draw conclusions from clicks and call it research. The authors pounded on George Bush as the cause of the Financial Meltdown, compared him to Barack Obama for their errors in handling the economy, took several opportunities to point out how wrong Conservatives were, all the while pretending to be non partisan. They even took a chapter to make their case for the elimination of the Mortgage Interest Deduction suggesting that middle class Americans gain no benefit from it. They called it a government expenditure. How can it be an expenditure if the government never collected the money in the first place to spend it? They concluded the book by patting themselves on the back for starting the last chapter with a quote by Donald Rumsfeld. Arrogant, directionless and unhelpful.

[Susan Mcnerney · Rating 4 out of 5]

Does an overall good job of interpreting and presenting Zillow's daunting mountain of data in a way that an average person can understand. Quite useful when determining pricing of a house for sale, in particular. Caution is warranted, though, with the absolute certainty the authors convey with their conclusions; they are interpreting data based on their own assumptions, and their assumptions may reflect flaws and biases that are not immediately apparent. In any case, their approach to pricing, market timing, etc has a solid foundation and is worth a read for anyone entering the market.

[Andy White · Rating 4 out of 5]

If you are a House Hunter fanatic like me, you will really enjoy this book. Interesting facts.....like the best week to list your house. The authors share their view of the real estate world with humor and well presented data. One negative is that they do talk up their online service to some extent.

[Janssen · Rating 3 out of 5]

Some parts of this were FASCINATING and I blew through the chapters. Others dragged for . . . ever.

[Cagefighter18 · Rating 3 out of 5]

This has some interesting tips and ideas for buying/selling real estate, but many of the topics were either their soap box on policy issues, or market relationships that don’t necessarily indicate causality.

[Steve · Rating 1 out of 5]

I had high hopes based on the premise of the book but I feel it failed to deliver on all fronts.

The writing just isn't that good and unfortunately neither is the analysis.

This quote from the last chapter pretty well represents this entire book:

"By February 2007, the average housing price declined to $197,000 from the pre-Katrina median of $203,000."

[Kit · Rating 2 out of 5]

I didn't love this - felt like there was a lot of 'how to lie with statistics', where solid data was used to draw shaky (and eye catching) conclusions. Maybe I wasn't the target market here.

[Anne · Rating 3 out of 5]

Highly skimmable in a good way. Good to look through if you are considering a housing change.

[Nzcgzmt · Rating 3 out of 5]

Spencer Rascoff is a co-founder of Zillow. Stan Humphries is an economist and runs the analytics group at the company. They shared some interesting insights from Zillow’s data analysis regarding residential property investments in the US. One of the innovations Zillow had was using hundreds of simple models rather than complex models to better utilize hyper local data.

Some of the interesting insights are:

1) The single most important factor that determines buying versus renting is how long you plan to live in a home - which is location dependant. The breakeven horizon takes longer in some of the metros (such as DC and Boston, both ~4 years in 2014), but shorter in others (1.4 years in Dallas-Ft.Worth).

2) Homes adjacent to the city center (typically less expensive) often tend to appreciate faster than those in the city center (typically more expensive). The spread between them tends to shrink over time. One exception is Seattle where neighborhoods are more homogeneous.

3) Neighborhoods are most likely to gentrify if they have: 1) older homes; 2) low home-ownership rates; 3) some access to more popular neighborhoods. For example, when a sub-par neighborhood had more than 17% of its homes >40 years in 1980, then it would appreciate faster than half the neighborhoods in the county 47% of the time.

4) Properties near Starbucks appreciate faster and are more resilient in recessions.

5)The bottom 10% homes in more affluent neighborhoods tend to underperform (a.k.a don’t buy bad houses in good neighborhoods). For example, those affluent buyers in Park Slope are not looking for a $375k co-op. However, the worst homes in the hottest neighborhoods do tend to outperform. But it is very hard to get the timing right. The correct strategy: buy a decent home in the right neighborhood.

6) In gentrifying neighborhoods, new high-density developments such as condos and apartments will drive up prices for cheaper properties.

7) NYC, SC and NM offer more egalitarian education and thus school quality does not drive home value much. The Rust Belt states of OH, PA and MI are at the other end of the spectrum. The relationship between school quality and home value is exponential. For example, in PA, moving from 5 to 6 in GreatSchools ratings represent a 15.4% increase in home value. But moving from 8 to 9 represents a 60.1% increase.

8) 5/1 ARM and 7/1 ARM can be great for people with shorter investment horizon because of the lower interest rates in the initial years.

9) The foreclosure market is much more efficient than people think, especially in liquid markets. In markets with lower velocity, the foreclosure discount would be higher. For example, Cleveland had 25.8% foreclosure discount in 2012; Pittsburgh 27.4%.

10) Ask the inspector for advice on additional inspections as some areas may not be covered.

11) Mid-range bathroom renovations offer the highest ROI; kitchen renovations (regardless of level) offer the lowest.

12) There is typically a sharp spike in Zillow visitors making contact with real estate agents in the early spring, ramping up in the third week of April, and continuing into July. Nationally sales peak at the end of June. Listings spike between the third week of February and the beginning of March. Homes listed in the last week of March sold the fastest and for the most money. Warmer weather markets peak in the late spring and colder weather markes peak in early summer.

13) The lucky number 8 will have a 1.5% premium in markets with >10% Chinese descendants.

14) On average sellers overprice their homes by about 6.9%. When a listing is overpriced, it tends to sell for LESS than its estimated market value.

15) The top 1% agents sell at least 22 homes per year. The top 10% sell an average of 7 homes per year. Male agents tend to get higher sales price (+0.4%) but female agents sell faster (+2%).

16) In pro-gay neighborhoods, every additional gay couple (out of 1,000 households) raise property values by 1.1%. In anti-gay neighborhoods, every additional gay couple decreases property values by 1%. Over the past 40 years, home prices gay neighborhoods steadily outperformed the average.

17) Homes in named streets tend to be more valuable than numbered ones (+2%). But in Atlanta and New York, they turn out to be equal. Street and Avenue were favored in the 1950s; Courts, Ways, and Circles were favored in the 1980s.

18) Canadians and Brits are the most active foreign buyers in NYC.

19) Riverside, LA and Phoenix are the most volatile markets. Home values in Riverside swing an average of 2.9% per quarter; LA, 2.6%; Phoenix, 2.4%. Possible reasons could include: 1) their transient employment bases; 2) buying interest among the retired population (who could prolong their stay in their existing homes if the economy is in a bad shape); 3) interests among foreign buyers. Also volatility of this magnitude could easily create negative equity, which in turn worsens market conditions.

20) More walkable neighborhoods offer higher returns and are more resilient in downturns. Affluent areas tend to offer higher, more stable returns, whereas less affluent areas tend to offer lower, more volatile returns.

21) Coastal housing markets do not have a “storm and flood discount” likely because of moral hazard (the government always rebuilds).

22) Bubble indicators: 1) Negative equity; 2) demands driven up by low mortgage rates.

Overall it is a light read and fairly interesting.

[Becki · Rating 3 out of 5]

Super-nerdy. A lot of statistics, some of them probably now out of date since the book was published in 2015. I found parts of it supremely interesting, though. And I don’t mind the nerdy factor either.

[Zeke · Rating 3 out of 5]

This book contained interesting housing data. It's easy to read. If you're in the early stages of buying a home, it's worth a read to familiarize yourself with terminology. Using data, it presents arguments against conventional wisdom such as "buy the cheapest home in the most expensive neighborhood" or 30 year fixed rate mortgages are for everyone.

[Dylan · Rating 4 out of 5]

This book provides good beginner-level ideas about real estate. As a newbie to the topic, I enjoyed it. Writing-wise, it's a little corny and definitely lacks some appeal, but I simply wanted to learn more and for this, it more than delivered.

[Joseph Roach · Rating 4 out of 5]

Real estate meets Freakonomics. Fun read to get a better idea of Zillow algorithms and some correlation data regarding buying and selling a home. If that sounds interesting, good book!

[Moriah · Rating 2 out of 5]

A Christmas present from James who knows that I like browsing at houses. This read like an advertisement for Zillow. While the authors had some data to prove their points, the points were fairly obvious trends and not that insightful. Not so sure any of their data is helpful for predicting what will happen in the future, but clearly has power in showing past trends in the housing market.

[Felipe · Rating 4 out of 5]

While somewhat simplistic at times, this is nevertheless a worthwhile read for any current or prospective homeowner or investor. Easy-to-follow statistical analysis, and entertaining anecdotes.

[Denise · Rating 4 out of 5]

Interesting fir non-fiction. Always end the price of your house in a 9!

[Laura Fingal-Surma · Rating 3 out of 5]

Worthwhile read and of general interest but not terribly relevant to the Bay Area real estate market which is outrageously expensive relative to the rest of the country. (Might I add: why is there a special chapter on NYC but barely a mention of SF?) The second half was weaker than the first other than a strong chapter about the mortgage interest deduction.

The best takeaway from this book was this fantastic David Foster Wallace quote:

"Then let's talk about pants. Trousers, slacks. I suggest to you that having the 'correct' subthoracic clothing for U.S. males be pants instead of skirts is arbitrary (lots of other cultures let men wear skirts), restrictive and unfair (U.S. females get to wear pants), based solely on archaic custom (I think it's got something to do with certain traditions about gender and leg position, the same reasons girls' bikes don't have a crossbar), and in certain ways not only incommodious but illogical (skirts are more comfortable than pants; pants ride up; pants are hot; pants can squish the genitals and reduce fertility; over time pants chafe and erode irregular sections of men's leg hair and give older men hideous half-denuded legs, etc. etc.). Let us grant — as a thought experiment if nothing else — that these are all reasonable and compelling objections to pants as an androsartorial norm. Let us in fact in our minds and hearts say yes — shout yes — to the skirt, the kilt, the toga, the sarong, the jupe. Let us dream of or even in our spare time work toward an America where nobody lays any arbitrary sumptuary prescriptions on anyone else and we can all go around as comfortable and aerated and unchafed and unsquished and motile as we want. [...] And yet the fact remains that, in the broad cultural mainstream of millennial America, men do not wear skirts. If you, the reader, are a U.S. male, and even if you share my personal objections to pants and dream as I do of a cool and genitally unsquishy American Tomorrow, the odds are still 99.9 percent that in 100 percent of public situations you wear pants/slacks/shorts/trunks."

Ah, yes, feminism is for everybody.

[Alex H · Rating 1 out of 5]

I'm not in the habit of leaving 1-star reviews (even books I do not particularly enjoy tend to have kernels of applicable useful information). Zillow is a massive data aggregator used by the public to estimate real estate values; I was expecting to glean interesting and useful insights from their massive data collection and analysis efforts. As the book progressed I became increasingly dismayed at the ineffective use of statistics - improper use of regressions, mixing up (and I think sometimes reversing) correlation and causation, declaring certain conclusions 'mysteries' because no clear answers were generated by simple quantitative analysis (when there was a relatively simple probably correct qualitative answer in the public domain). My biggest take-away was that Zillow needed to beef up its analytics department. I usually enjoy learning from statistics practitioners - but in this particular case I left with the distinct impression that I could have done a better job with only an undergraduate econometrics degree. Save yourself the time and money by just reading the Zillow website - the only interesting insights from the book are freely available there.

[Carly Thompson · Rating 2 out of 5]

Non-fiction look at the real estate market and an extended ad for the website Zillow. Written by two of the founders of Zillow this book offers tips for people looking to buy a home or to sell one as well as interesting facts such as houses located on a street sell for less then houses on a court or way. Some of the information could be valuable such as an adjusted rate mortgage might make sense if you don't plan on staying in the house for the rest of your life or that the best time to list your house for sale is March. Other tips such as making sure that your home inspector is qualified seem fairly obvious to me. The short chapters, chatty conversational writing style and simple charts and graphs make this similar to Freakonomics and ideal for people who want an easy to read look at the real estate market. There are sections that can easily be skipped and overall the advice boils down to know what you want and do your research (with lots of plugs about how great Zillow is)

[MD · Rating 5 out of 5]

It isn't often that I have trouble putting down a nonfiction book, but I. certainly had trouble putting this one down. I read for as long as I could keep my eyes open last night. In some ways it reminded me of The Tipping Point in finding unexpected information from data. But a big difference here is that you can actually put some of the information to use. There is also some information about how policies that sound good really aren't. Overall a highly recommended read. There are already two people waiting to read my copy. The only quibble I have is that the newest data cited is from 2013 so some of the housing recovery information is a little dated already.

I received a copy of this book via Firstreads and I thank the publisher for the opportunity to read and review this excellent book.

[Allison · Rating 3 out of 5]

This is sort of like a Freakonomics for real estate, except that the authors' major goal is to give you the information you need in order to make informed choices when buying or selling a home.

About 50% of this book was fascinating, and about 40% was useful to me as a potential first time homebuyer. However, I found that I am less than fascinated by number crunching for the sake of number crunching when it comes to real estate, even when those numbers are crunched in new and enlightening ways.

Overall, though, eminently readable and useful - I learned more about the housing market as a whole, and picked up some things that I can apply. Now I need a book like this written specifically for my city...

[Megan · Rating 2 out of 5]

A quick read for anyone looking to buy or sell a single family home in middle America, but not a particularly helpful one. There is a lot of superfluous data, and the book is basically one big advertisement for Zillow. You're better off finding a fabulous real estate agent.

I wouldn't say this is the most relevant book for specialized real estate (cities in general, San Francisco in particular), but there are some worthwhile anecdotes. The discussion in the last several chapters on the mortgage interest deduction and decoupling home ownership with the American dream were the book's saving grace.

[Amanda · Rating 2 out of 5]

Interesting tidbits gleaned from a bunch of the data Zillow has made available. Mostly correlational trends/spurious relationships without data to back up causation or to explain away confounders. Entertaining, but not something I would lean on as a tool for investing wisely or staying ahead of the real estate game.

[Evan Hoekzema · Rating 4 out of 5]

I thought this book was an enjoyable take on the current housing market. It gave a much more detailed explanation of different factors affecting home buyers and sellers and some things felt unimportant, but most of it was interesting. It was a great listen, and a helpful resource.

[Chris · Rating 4 out of 5]

Great book to pick up if you're thinking about buying or selling a home

[Margee · Rating 3 out of 5]

An interesting glimpse into the online real estate giant zillow.com, and what all its years of statistics-gathering can tell us, told in an entertaining, informative, and well-composed style.