Zillow Market Data: How Investors Can Use It for Their Market Research

Are you looking for market data and analytics to help you make smart investment decisions? Then, you must’ve heard of Zillow market data.

The modern-day real estate investor is smart and constantly uses various tools to help them make informed investment decisions. As such, online platforms that offer automated estimates and valuations are becoming increasingly popular.

Zillow is one of the most sought-after platforms for real estate investors looking for properties and market data. In today’s post, we look at Zillow market data, what it offers, and how accurate it is. We’ll also look at a better option that comes in where Zillow falls short.

Let’s start with the basics.

What Is Zillow?

Essentially, Zillow is more popular for being an online real estate marketplace. However, there’s much more you can get from the platform. You can find a lot more from the website, including anything related to buying, selling, renting, and loan financing of a home. The company’s main goal is to help investors access the necessary information related to homes.

If you’re a buyer, Zillow sells homes directly through the Zillow Offers program. You can also buy the homes directly from the buyer through foreclosures or find an agent listed through the Zillow Premier Agent program.

For users looking for a rental investment property, Zillow allows them to browse rental listings. In addition, they can apply through the platform and speed up the background and credit check process. If they have a budget, they can simply use their affordability calculator and also pay online instead of manually using checks.

As for sellers, they can list their properties for sale on the platform and use Zestimate’s tools to establish their homes’ true values to avoid overpricing or leaving money on the table. Zillow’s Agent Finder also allows them to find real estate agents, property managers, home improvement professionals, photographers, inspectors, and many other services.

Now that we’ve seen what Zillow actually is, let’s see what Zillow market data you can get from the platform.

What Market Data Can You Get From Zillow?

Zillow market data tool, popularly known as Zestimate, uses an algorithm to help you determine an automated estimate of a property’s value. The algorithm by Zillow uses property data obtained from property owners, public records (such as the property appraiser or tax collector), and real estate professionals. In addition, investors can compare the Zillow market data to other comparable homes that were recently sold in the same neighborhood.

The Zillow rental estimate data involves the following data points:

• Home Values: Zillow Home Value Index (ZHVI) is a measure of home values that is adjusted every season. It also reflects market changes across a particular region and property type. Investors can use it to get home values for properties in the 35th to 65th percentile range.
• Home Values Forecast: The Zillow Home Value Forecast is a one-year prediction of the ZHVI (above).
• Rentals: Zillow Observed Rent Index (ZORI) is a measure of the typical amount of rent a tenant is going to find in a certain region. It’s a repeat-rent index that reflects the rental housing stock to ensure the amount represents properties across the entire market, not just those listed on the platform.

How Is Zillow Market Data Calculated?

Zillow doesn’t share the exact formula it uses to come up with the Zestimate figures. However, the platform says that it utilizes “statistical and machine learning models” to “examine hundreds of data points” for each home. Note that the said “data points” mean things like the property’s square footage, number of bathrooms and bedrooms, and location. 

The Zestimate also factors in the tax assessment and prior sales. If the home is listed for sale, the website also checks its listing price and for how long the investment property has been available. Last year, Zillow claimed it had updated the formula to make the estimates more dynamic and responsive to market trends and seasonality.

As we mentioned, Zillow mainly gets its data from public records, which are available to the public in most states. In addition, they also get the data from the local Multiple Listing Services (MLS). Remember that most agents in many real estate markets use the MLS database to share details about listed properties. Most of these databases were previously private. One of Zillow’s earliest innovations was making the information available for anyone with an internet connection.

Zillow also updates its data based on information obtained from homeowners. They recommend doing this if you feel the Zestimate provided is inaccurate, whether too high or too low.

Is Zillow Market Data Accurate?

One of the biggest concerns consistently bugging Zillow users is its data accuracy. Many users have observed incorrect property details, such as inaccurate square footage or the number of bedrooms and acreage.

Many factors go into determining a property’s accurate valuation. Zillow’s algorithm only factors in concrete factors, such as location, property’s age, number of bedrooms and bathrooms, and square footage. They miss out on other vital qualities, such as property condition and features, which play a major role in a home’s valuation.

If the property you’re interested in is a considerably good condition for the neighborhood and the market has been quite active within the past three to six months, the Zestimate will be more accurate and closer to the true value of the home. However, if the home has some unique features that make it stand out (or the opposite), is in need of vital repairs, or the market has been quite dormant, it’s more likely that the Zestimate will be inaccurate.

Many realtors who’ve been using Zillow for a long time have said that the Zestimate figures are almost never in line with the property’s actual value in its as-is condition. 

Related: Zillow: Reliable Property Search Tool for Real Estate Investors?

Zestimate’s Assessed Value Error

From what we’ve already gathered, Zillow also factors in a property’s assessed value from tax records in its Zestimate formula. Unfortunately, it is a major cause of its market data’s inaccuracy. Rarely does the assessed home value match the market value. They are two different figures.

The assessed value of a home is mainly used for tax collection purposes. In many cases, it’s also used to trail a home’s market value. Using the assessed value to determine the market value will throw your outcomes off the track.

Some realtors who’ve used Zillow have said that they’ve seen some properties sell for over $100,000 more than the figure they got from Zestimate. Others have sold for much less than the Zestimate.

A property’s assessed value shouldn’t be used to determine its market value. Otherwise, a realtor’s job would be much simpler.

Mashvisor Market Data: A Zillow Alternative

Now that we’ve looked at Zillow market data and some of its shortfalls, let’s look at an alternative that stands out.

What Is Mashvisor?

Mashvisor is an online real estate platform that was developed to help both new and experienced real estate investors locate the most lucrative rental properties in any housing market in the US quickly and efficiently. Mashvisor does it by using real estate property and market data that you can access through the various tools that we have.

Finding market data by yourself can be time-consuming and quite tedious. With Mashvisor, you can carry out the entire process in about 15 minutes. Other than that, you can find the estimated return on investment for your property and make smart business decisions to stay ahead of your competitors.

Related: How to Conduct a Thorough Airbnb Investment Analysis

What Market Data Can I Find on Mashvisor?

Do you want to explore other options other than Zillow market data? Here’s what you get access to once you sign up for Mashvisor.

Real Estate Market Data

As a smart real estate investor, you know that investing in the ideal location is the key to a successful investment. A good location assures you good cash on cash return. Keep in mind that your property’s profitability is reliant on factors such as home prices, inventory, rental property demand, rental rates, occupancy rate, and many others.

The above factors vary from one location to another. You must study the trends before you invest in any location. In other words, you must carry out a real estate market analysis. It can take you months to finish if you decide to do it manually. However, Mashvisor saves you all the trouble. 

Here’s how to access market data on Mashvisor:

Top Locations

We created the Top Location category in our investment blog to help you find the best locations to buy a rental property based on our market data. And there’s more; investors interested in the most profitable markets in the US can get the data for absolutely no fee.

Our investment blog is also in itself a great source of market data. Here, you’ll find many valuable articles, from how to invest in real estate to real estate market trends and top markets for rental property investing. Additionally, you’ll also find helpful information on housing statistics and predictive analytics based on our market data. 

It can be a great place to start if you want to narrow down locations you’re interested in.

Related: Best Cities for Airbnb Investment 2022: Where Should You Invest?

Real Estate Heatmap

Mashvisor’s Real Estate Heatmap, one of our top tools, is one of the best sources of market data. It’s the first tool you’ll see when you begin your search for listed properties for sale in the city, neighborhood, or zip code of your choice. 

On the right side of your search results, you’ll see a list of all residential properties for sale in that market, as well as the property details for each listing. The dataset provided includes details such as listing price, square footage, number of bedrooms, cash on cash return, and cap rate. One of the main benefits of Mashvisor is that the rate of return metrics (cap rate and cash on cash return) are provided for both traditional and Airbnb strategies. Based on the data provided, you can then decide on an ideal rental strategy for you.

The Heatmap is a color-coded overview of how the rental properties in a certain neighborhood are performing. You can use the following criteria to analyze the performance of those neighborhoods:

• Listing price
• Airbnb cash on cash return
• Traditional cash on cash return
• Airbnb rental income
• Traditional rental income
• Airbnb occupancy rate

The data provided by the Heatmap is quite straightforward. The color green represents areas where rental properties perform well. Red represents those areas that may be a bit dormant. Neutral areas are represented by yellow and orange.

The Heatmap tool is beneficial for studying real estate market trends, analyzing different neighborhoods, and finding the best locations in a certain market.

Investment Property Calculator

The Mashvisor Rental Property Calculator also provides you with real estate market data. The Neighborhood pages in the calculator provide you with the following data for any neighborhood in the US:

• Median property price
• Average price per square foot
• Traditional and Airbnb cash on cash return
• Traditional and Airbnb rental income
• Number of traditional and Airbnb rentals
• Number of residential real estate listings
• Airbnb occupancy rate
• Walk score
• Optimal rental strategy
• Real estate comps
• Historical rental income
• Optimal property type
• The optimal number of bedrooms

Mashvisor vs. Zillow: Verdict

As you can see, both platforms are essential for real estate investors. Although they are similar in a few aspects, there are some features that make them different. We’ve already seen that one of Zillow market data’s main issues is accuracy. 

Mashvisor, on the other hand, demonstrates a high level of data accuracy. It is because it pulls its data from reliable real estate platforms. For example, vacation rental data is pulled from the Airbnb platform, so you’re sure the data is from actual Airbnb hosts who have been in the business for a while.

Also, Zillow doesn’t provide an in-depth analysis. While Mashvisor doesn’t offer a free version, the price is totally worth it. We provide a wide variety of real estate tools that help real estate investors, agents, and realtors carry out a comprehensive market and rental analysis. Our tools are more advanced to help you benefit from our market data. 

Whether you’re looking to buy your first Airbnb rental property or rental property to diversify your real estate portfolio Mashvisor is your one-stop-shop for market data. Book a demo to learn more about what we have to offer.