The good news: Zillow dropped the unrealistically high value on my home. The bad news: Zillow dropped the unrealistically high value on my home.
The multi-million dollar drop in value—at least on paper—comes at the time when lenders are closing home equity lines because of falling home values. Countrywide Home Loans, for example, notified at least 122,000 homeowners nationwide that they can no longer draw on their home-equity lines of credit. Countrywide is citing “significant depreciation.”
I can’t imagine many homeowners had more rapid depreciation than I did.
According to Zillow statistics, the home value fell about 80 percent in less than two months. In late January, Zillow valued the 1875 Victorian in suburban New York City an unrealistic, no-connection-with-reality $6.6 million. The value fell a million dollars by early February, and then fell precipitously after I asked the company for an explanation of its estimate.
Obviously, someone made a mistake. The house—even at the peak of the home buying frenzy—was never worth as much as Zillow speculated. The current value is clearly more realistic.
Still, I wonder about the possible impact of such a rapid fall.
Chase and Washington Mutual have also frozen home-equity lines in response to falling home values, and Wells Fargo is reviewing home-equity accounts more frequently than it did historically.
Some industry experts, including Guy Cecala, publisher of Inside Mortgage Finance, thinks, “We’re just at the beginning of this trend of lenders freezing home-equity lines of credit.” And where are lenders getting their home value data? According to some news reports, the same place everyone else seems to be looking…online.
So could Zillow’s mistake jeopardize my own line-of-credit?
I’d like to think technology has created greater transparency and accountability. The fact is, it’s more likely to just make information faster to obtain and easier to find. Ideally, someone still assesses that data for accuracy. But I’m not betting on it.
Odds are a lender will be just as likely to believe the computer as a long-time employee.