Published on 12 Dec 2011 9:00 AM
By Michael Stumpf, AICP, CEcD
Two homes of a similar size and age, on equally-sized lots in the same neighborhood, should have more or less equal value. On the face of it, this seems like a reliable statement and is the basis for several home value websites such as Realtor.com or Zillow.com. These services rely on such basic assumptions in developing algorithms to calculate expected home values based only on data from sources such as assessment roles (providing information such as lot and building size) and recent home sales in the vicinity. But what about other factors not apparent in the data? What if one home is a beautifully restored 1900’s Craftsman bungalow in a quiet neighborhood across from a park, while the other is a poorly maintained and nondescript ranch house on a four-lane arterial surrounded by industry? While obvious to us, the computer cannot “see” these differences and will suggest similar values for the homes, significantly over- or under-estimating their value.