Redfin says prices are up. Zillow says they’re down. What’s the truth?
Redfin’s Analysis
According to Redfin, the median home sale price in Raleigh is up 6.4% year over year.
Zillow’s Analysis
But, according to Zillow, the median home price is down in Raleigh by 2.7% compared to the same time last year.
The conflicting information all over the internet is exasperating, so I went to the MLS to find out who’s right and who is wrong.
The Truth. . .
I looked at all closed sales from the last business day through the same day last year. I found the median price was $435,000. Then I compared it to those same dates this year and found the median price was $460,000. That is a 5.7% increase year over year. It’s closer to the Redfin number but nowhere near the Zillow analysis.
First let’s talk about why the Redfin number differs.
I was pretty close to Redfin so we can probably extrapolate that Redfin was using slightly different metrics than I was. Even just changing the dates on the data pool would give you this kind of difference. If I change the dates on my search so that it’s pulling January to January, rather than September to September my median prices change to 420,000 last year and 449,000 this year. Or 6.9% increase year over year. Maybe they also used a slightly different geographic boundary. Maybe their Raleigh sales meant the Raleigh area, rather than just Raleigh. I don’t know. But there is bound to be a slight difference in how we pulled the data.
But the difference between Zillow showing a nearly 3% decrease and Redfin and I both showing a roughly 6% increase is significant. Where is Zillow getting these numbers and could they be right??
To find out, I went to Zillow’s website to try to find out how they came up with this number. And this is what I found:
There’s our answer!
The Zillow Home Value Index is basically calculating sales that didn’t happen. It’s based on the Zestimate of homes that were never listed on the market. Redfin uses homes that actually sold.
I’ve used Zillow’s number in the past for general information, particularly for areas where I don’t have access to the MLS. I can promise you I won’t be doing that anymore, and I suggest you don’t either.
