Zillow Launches New Neural Zestimate, Yielding Major Accuracy Gains

Rhea-AI Summary

Zillow has unveiled significant upgrades to its Zestimate home valuation model, enhancing its responsiveness to market trends and improving the national median error rate to 6.9%. The new algorithm utilizes neural networks and incorporates extensive property data, enabling faster processing times and more precise home value estimates. This accuracy boost is expected to increase the number of homes eligible for cash offers by 30%, expanding Zillow's home buying program. With over 104 million homes valuation, these updates signify a noteworthy advancement in real estate technology.

Positive

• Improvement in national median error rate of Zestimate to 6.9%.
• Utilization of neural networks allows for faster processing and more accurate home valuations.
• Expected 30% increase in homes eligible for cash offers, enhancing Zillow's home buying program.

Negative

• None.

SEATTLE, June 15, 2021 /PRNewswire/ -- Zillow today launches significant upgrades to its Zestimate® home valuation model.  The changes allow the algorithm to react more quickly to current market trends and improve the national median error rate to 6.9% -- an improvement of nearly a full percentage point for more than 104 million off-market homes. 

The new Zestimate algorithm leverages neural networks, the latest machine learning approach, and incorporates deeper history of property data such as sales transactions, tax assessments and public records, in addition to home details such as square footage and location.

Neural networks are artificial intelligence systems that imitate how the human brain works. They are able to map hundreds of millions of data points efficiently, drawing connections among inputs and using the relationships formed to produce or predict an output. In the case of the Zestimate algorithm, the neural network model correlates home facts, location, housing market trends and home values. 

As a result of this update, the Zestimate can now react more quickly to dynamic market conditions, providing homeowners with a more accurate estimate [prediction] of a home's current value. In addition, transition to a neural network-based model will reduce Zestimate processing time.

"Since we introduced the Zestimate in 2006, we have never stopped innovating in order to provide consumers with the most accurate home valuations," said Dr. Stan Humphries, Zillow chief analytics officer and creator of the Zestimate. "The new architecture we're debuting today represents another significant step forward in our efforts to harness big data to create more certainty for consumers, which leads to better decisions."

Fifteen years ago, the Zestimate gave people instant access for the first time to an estimated value for millions of homes across America for free. Over the past decade and a half, Zillow has released multiple major Zestimate algorithm updates as well as incremental improvements between major upgrades, and now calculates valuations for more than 104 million homes across the country.

As a result of the company's increasing confidence in Zestimate accuracy, in February Zillow began using the Zestimate as a live, initial cash offer through its home buying program, Zillow Offers. The Zestimate is an initial cash offer on about 900,000 eligible homes across 23 markets. With this latest update and increased Zestimate accuracy, the number of homes eligible for a cash offer will likely increase by 30%.

Applying a neural network model to a national real estate dataset was an innovation used by the winning team of Zillow Prize, the two-year, $1 million data science competition that included more than 3,800 teams from 91 countries working to improve the Zestimate.  One member of the team, Jordan Meyer is now a senior applied scientist at Zillow and works on home valuations for Zillow Offers.

About Zillow Group
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life's next chapter.

As the most-visited real estate website in the U.S., Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and nearly seamless end-to-end service. Zillow Offers® buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Home Loans™, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase. Zillow recently launched Zillow Homes, Inc., a licensed brokerage entity, to streamline Zillow Offers transactions. 

Zillow Group's affiliates and subsidiaries include Zillow®, Zillow Offers®, Zillow Premier Agent®, Zillow Home Loans™, Zillow Closing Services™, Zillow Homes, Inc., Trulia®, Out East®, StreetEasy® and HotPads®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).

 

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SOURCE Zillow Group

FAQ

What is the new Zestimate error rate as of June 2021?

The new Zestimate error rate has improved to 6.9%.

How much has Zillow's Zestimate accuracy improved?

Zillow's Zestimate accuracy has improved by nearly a full percentage point.

What technology is used in the new Zestimate algorithm?

The new Zestimate algorithm utilizes neural networks and machine learning.

By how much will the number of homes eligible for cash offers increase?

The number of homes eligible for cash offers is expected to increase by 30%.

How many homes does Zillow's Zestimate currently calculate valuations for?

Zillow's Zestimate calculates valuations for over 104 million homes.