As of June 17, 2015, Zillow’s Zestimate® is only $162 from my Make Me Move® price. Sound like gibberish? Welcome to one possible future in real estate. My house, which isn’t listed, could get an offer. We’re about to see. A key element of personal finance shifts yet again.
If you haven’t heard, Seattle’s housing market is rather bubbly. The rule of thumb is that a normal market has about six month’s of inventory. Seattle has less than two months of inventory, ~ 1.8 months. Oops, ~1.2 months. Houses are selling in days instead of weeks or months, though that happens, too. The interesting thing is that, this bubble may continue. The Seattle job market is growing, with about 45% of the folks moving here making over $125,000 per year. People expected a housing rebound, so there was good upward movement from the recovery, but then a booming job market for computer types got layered on that. Then, Silicon Valley became so expensive that corporations began moving their operations, many of which came to Seattle. Now, you need to make at least $71,000 to get a house in the city, and good luck with that because folks with higher salaries are also getting outbid. I watch for bubbles to burst, but the trends feeding this one seem to have a lot of energy behind each of the drivers.
I don’t live in Seattle. Seattle is still a good label for folks from out of town, but I’m two counties away and on an island. Something happens in Seattle, and eventually the news hits here, too. Island County’s real estate has languished since the Great Recession. We have a higher percentage of vacation homes, so the demand has been low because people retreated to having fewer houses and greater financial stability. I didn’t have great financial stability, but with that market I wasn’t able to sell my house. I almost lost it. Fortunately, I was able to keep it.
Unfortunately, I might have to sell it. Yet again, I have to consider selling my home.
For those who have been watching my financial turmoil progress and improve, I salute you. You have immense patience. Every year has been better than the last since about 2012. My business is improving (thank you), but the business revenues stay just below my living expenses. The good news is that there are so many prospects providing near term optimism that I can look forward to undamming my plans. The bad news is that the bills are even nearer term, and yet again I find myself just on the wrong side of positive finances. The prudent response in such times is to consider all options, one of which is selling my house, my home.
I tried selling it before. Depending on who you asked, I probably would’ve broken even, or maybe made less than a few month’s living expenses. After I managed to negotiate a modified mortgage, I took the house off the market. With the new mortgage, my payments would be less than rent, and still are. Since then, Zillow estimated a low point for my house’s value at $236,000 in October 2014. Whether because the threat of foreclosure is removed, or because Seattle’s market is rising, or because of some fluke in their algorithm, Zillow now shows a Zestimate® of $323,838. If I sold now, I could make about two year’s frugal living expenses, and be completely out of debt – and homeless, but in a good way.
When I took my house off the market, I decided to leave the door open for the right buyer. Zillow’s Make Me Move feature lets home owners post prices that will make them move, under the right circumstances. There’s no commitment, but it is a simple way for buyers to know whether it is worth sending a message or knocking on the door of a house that isn’t for sale or on the market. Really though, almost any house is for sale and on the market, if the price is right. Some folks will never leave their house! But if someone offered them an extra million dollars, will they say the same thing? My thoughts weren’t that grand. I picked a number about a hundred thousand dollars over my mortgage. It wasn’t precise, it was just a way to open the door to possibilities. I didn’t expect the Zestimate to approach it so quickly. It is only $162 away. I wonder what will happen.
Take the numbers from above and then realize that my house’s value has been increasing by about $360/day. At that rate, the Zestimate should zip past by the time you read this. I know there are more people checking out the house online. They show you that data. But no one except agents looking for listings have called, so far. It would be good to relax my financial woes.
Take those numbers and look again. It is rare that my business makes that much in a day, and the real estate value requires far less work. Every day I stay here, my net worth increases a few hundred dollars. I need to continue working because that is asset growth, not income, but if the estimate is real, then I can start relaxing my work schedule according to my Rule of 7. For every hundred thousand my net worth increases, I give myself an extra day off each week; and then above $700,000 I can celebrate a re-retirement.
What’s going to happen? I don’t know. There is considerable debate about Zillow’s estimates. As a math geek, I know that the more they collect data, the better the accuracy can become. There are good reasons to doubt the estimate for my home because the house across the street is about the same size on about the same size lot and hasn’t been able to sell at $219,000. The view may not be as nice, but the disparity seems too large. Shrug. Who knows?
I do know, however, that a Make Me Move price is a new element in personal finance and residential real estate. My comfort zone is for someone to just give me more than enough money and take the house as-is; but my other comfort zone is to work with the same real estate agent I’ve used for several houses because selling real estate is far more complicated than selling stock and she’s better at it. She’s a professional. I’m not, at least not for selling real estate.
The optimum, as usual, is to correctly predict the future and act accordingly. Ha! The reality is that I’ll thank Zillow for the Zestimate. I’ll keep working as hard as I have been. If the business or the investments make me enough money, then I can always adjust the price of the house. In the meantime, I’ll see if Zillow helps make me move. Either way, I have more options, and better options than I had before.