San Diego Housing Bubble News and Analysis

I've noticed that Zillow fairly consistently overestimates prices, starting some time ago (that I've forgotten), within the last 2 years.

I suspect they got a message that their business model wasn't going to work unless they cooperated.

I've seen Zestimates up 15% in the past 2-3 months for Oceanside SFRs. Not sure where they're getting those numbers but it can't be from comps ...

Previously, Zillow was merely overestimating the value; now, it is completely irrational. The best use you can get from Zillow is to expand the graph to 10 year mode and pick a historical value 8-10 years back. Basically consider this decade as the (first) lost decade.

Zillow still has my house that I sold in late 2005 20 percent higher than I sold it. Sad thing is, I don't think they are that far off.

According to Zillow, my house has gone up 150K in the last two months, and it stands at 210K above what I paid in January.

I keep an eye on comps and I can say with certainty that there's zero chance of my house appraising or selling for what Zillow thinks it's worth. But it's a nice feeling nonetheless.

I recently had my house appraised for a refi and it came back at $500K. Zillow has it at $465K. I got a fair amount of credit on the appraisal for upgrades, so zillow was pretty in line for me.

What zip code do you live in?

that house is in San Jose, CA.

ZEstimate for several properties in South OC that I have bookmarked are skyrocketing. One home that was $540,000 few months ago is now $655,000...Riighht! I think they are just pulling numbers out of their [you know what]

I have no clue why/how zillow gets their numbers.

For example - my house. Same models on our street, also without any additions, are showing $100k or more higher than ours. All of these houses are 40+ years old. The only thing I can figure is that our front yard isn't as nice. They sure as heck don't know what the state of the inside is. For all Zillow knows we could have the most fantabulous decked out new bathrooms/kitchens with hand crafted hardword floors installed by artisons. How would zillow know?

Now, we've added a companion unit - which changed our deed status to multi-family. Zillow shows us as multifamily, but does not give us the added square footage. And obviously doesn't give us the added value of having a detached 1 bedroom rental unit.

It doesn't matter to me. I'm not planning on selling anytime in the near or longterm... we're here for the long haul. But my house is proof that Zillow seems to pull numbers out of their butt. They don't seem to have much credibility.

It is nice to fantasize sometimes.

Homeowners love to quote Zillow
Homeshoppers love to quote Cyberhomes

The reality is usually some where in the middle.

Classic example: 3722 Sq Ft
862 Genoa Way
San Marcos Ca 92078
3722 Sq Ft

Zillow ZESTIMATE®: $746,500
Cyberhomes $575,000

Here is the next door neighbor's Zestimate.

860 Genoa Way
San Marcos CA 92078
3,728 sq ft

Zestimate®: $1,011,500

http://www.eppraisal.com

Eppraisal usually falls between Zillow (high) and Cyberhomes (low).

UCGal,

If you don't mind my asking, how much did the entire addition cost -- fees and permits, design/architectural work, engineering, materials, labor, etc? Also, what are the specifics: attached/detached, size?

We would be interested in doing the same thing when (if??) we buy.

Thanks!

We built a detached companion unit - 700sf. Handicap accessible. A very nice looking "casita".

Architecture - free. My husband is a registered architect.
It was on a slope, so we had civil engineering - 11k for the civil plan
4k for structural (2k building related, 2k for retaining walls)
10k for geotechnical (aka dirt).

If we had a level lot - you could eliminate the geotechnical, civil, and 2k of the structural... Engineering would have been 2k instead of 25k.

Permits - again atypical because we had the hill issues and had to get a civil permit and a separate permit for the retaining walls that hold the building site in place. The building permit was probably $30k, the others were a lot less. Oh and because of the retaining wall footings, we triggered a CalOSHA permit requirement. (Not at all typical.)

Our construction costs are not easily transferable, either... There was grading, building of retaining walls, etc. Oh... and the small issue that our first contractor ripped us off then abandoned the job - adding well over $100k to our total. If we had had a level lot with an honest contractor... It would have probably cost about $140-160k. You don't want to know what it cost. It was far more due to our specific lot and the worlds worst contractor.

Judging by your screen name, I presume you're renting. If you plan to do this, make sure the home you buy has a big enough lot. In San Diego (city) you need to have double the nominal size for your zone... In our case we needed at least a 10k sf lot since the nominal was 5k. Our lot was big - but on a canyon - so we had the added expense of grading/retaining walls. Unincorporated county has completely different rules. You'll want to check what the requirements are for a companion unit for whatever city you buy in. San Diego probably has the most restrictive.

But - it's worked out well (except financially)... my mother in law finds it much easier to care for my wheelchair bound father in law in a house that was designed handicapped accessible from the start. And my kids get to spend quality time with their grandparents - which is HUGE.

Ouch! That was a lot of money, and I remember you mentioning the contractor -- even though you tried to do a thorough background check, IIRC. Not uncommon, unfortunately. We've heard many similar stories, and this is probably my biggest fear in building or adding on.

I thought your DH did commercial work...would he be interested in doing residential, and if so, how much would he charge for a 2,500-3,000 s.f single-story house?

Your last paragraph is what makes it all worthwhile, though. This is exactly what we want to do. If we build our home from scratch, I want to incorporate "universal design" elements just for this purpose, and for ourselves in our old age. The companion unit is a given as far as handicap accessibility. Even if your in-laws aren't using it, there is a shortage of wheelchair-friendly rental housing, IMHO.

Not sure why so many houses were built during the boom with absolutely no regard for ADA compliance. My biggest gripe is with the two-story houses without a full (wheelchair-friendly) bathroom and bedroom on the bottom floor. As if nobody ever gets injured or disabled???

Yep - hubby does commercial.. primarily does hospitals, medical office buildings (MOB) and commercial office buildings. That last part is as dead as it can be in this market. But he's back to work, thank goodness. He doesn't do residential because he's found the customers don't have the cost/benefit tradeoff mindsets... they want high end finishes but low prices - and they're emotionally invested. They don't seem to understand that upgrading features/finishes adds to the price. Plus it's harder to get paid in residential architecture.

Oh - and our second contractor was better than the first, but still ripped us off. (Lied about the costs of things on allowance items.) We were labeled "difficult customers" because we wanted things built to the bid set specs and receipts for allowance items. I doubt we'll never hire a contractor again. If it can't be done by hubby and I - it won't get done.

My husbands advice on contractors for jobs over 20k... spend the extra 10% to get a performance bond that covers the full price of the contract. If it's hard to get, that's a red flag about the contractor. The bonding company will pay out if things go wrong. (State only requires $20k bond.)

And understand that the CSLB website does not disclose filed complaints until they've fully vetted the complaint - which can take a full year. Most consumers give up before that. So a clean license doesn't mean no complaints filed.

Checking court records doesn't help either - most contractors call for binding arbitration - no public database of filed claims with arbitration.

So glad to hear he's back to work! :)

Thanks for all your input. Sounds like a lot of headaches to build a house. We'll continue to look for an existing one.