Zillow-
By employing a neural network, the company says its numbers will be more accurate—and allow it to offer to buy more homes.
The following written content via WIRED.
STORIES OF PEOPLE getting cash offers for their homes tens of thousands of dollars over asking price have become normal. This year, inventory in the US housing market hit a record low while home prices hit a record high. Redfin CEO Glenn Kelman recently highlighted the craziness with a tweet recounting the story of a home buyer who offered to name their first-born child after the seller—and was turned down.
As the hot US housing market began to overheat, in February Zillow began making initial cash offers to buy homes based on its price estimate. Now Zillow has updated its algorithm behind those estimates in a way the company says will make them more accurate—and allow Zillow to offer to buy more homes.
The owners of about 900,000 properties were initially eligible to receive automatic cash offers to purchase a home. Zillow chief analytics officer Stan Humphries said the change to its artificial intelligence will expand that pool by 30 percent. A company spokesperson said Zillow Offers can close sales in as little as one week.
Zillow previously determined the value of homes using nearly 1,000 variations of algorithms derived for local markets. Now all prices nationwide will be decided by a single neural network. Zillow says the new algorithm will reduce its price estimate errors by 11.5 percent for off-market homes in nearly 30 regions across the US. Compared with the previous version of the algorithm, errors shrank the most in Phoenix, followed by San Antonio, Tampa, and Houston.
Using the new algorithm, Zillow will more frequently update its estimates of the value of 104 million properties in 23 US markets. Around the time the company was founded in 2005, valuations were updated monthly. More recently, they’ve been updated several times a week; now, some estimates may be updated daily.
Zillow’s home estimates are popular topics of local conversation, particularly in hot housing markets. A recent Saturday Night Live skit compared surfing Zillow to phone sex and joked that, for people in their late thirties, “the pleasure you once got from sex now comes from looking at other people’s houses.” Read more from WIRED.
