The bottom line: No one knows an area better than a local, experienced real estate agent. Don’t gamble your biggest investment on automated Internet data.
It’s Not All About the ZIP Code…Or Shouldn’t Be
I love the Internet and I’m an information junkie, but I am constantly amazed at how WRONG the real estate info presented on the internet is for my area: Katy TX. Katy is a large city (population 250,000+) located in in Fort Bend County, just west of Houston TX. Like all cities of its size…some parts are very different than other parts…it is not completely homogeneous. Furthermore, it consists of multiple ZIP Codes: 77450, 77494, 77493, and 77449. And, Katy is adjacent to Houston, Fulshear, and Richmond as well. So you can live in the Katy area but technically have a Houston address.
What really “bugs” me about the data available on the Internet is that most websites use ZIP Codes to determine demographics and “city data.” But you can’t do that accurately in Katy since it has multiple ZIP Codes. And to complicate matters, Katy is divided into multiple master planned neighborhoods and each of those may be split into multiple subdivisions. For example, Cinco Ranch consists of over 50 subdivisions. So you can have multiple neighborhoods and subdivisions within the same ZIP Code, but let me assure you that the demographics and average income for homes in Avalon Seven Meadows is drastically different than those in Falcon Landing (two subdivisions in the same ZIP Code).
Here are some examples that “bug” me. I’m using information for the nearby Sugar Land TX area, but you get the idea…
At the time the above data was posted on the Internet, I checked the Multiple Listing Service (MLS) database which reported a median list price at $329,000…not $349,440 (as shown above). And besides that…I assure you that we have many subdivisions in Katy where you can purchase a home for much less than that price! Or much more! So what’s the point of this information? And the “median” for 77478 is probably not accurate for a specific home in a specific subdivision.
NOTE: Home prices are a constantly moving target…even within the same subdivision. The averages, medians, and such change monthly…depending on current market activity. You have to evaluate the value of a home at the time you are making a purchase. (Which is one of the main services that a real estate agent should provide.) Home appraisals are professional opinions only and are typically only considered accurate for six months.
Neighborhoods Need to Be Properly Defined
At least NeighborhoodScout is trying to look at the neighborhood level (see below)…but they fail miserably. The sections they have segmented are not actual Sugar Land neighborhoods…some sections contain multiple neighborhoods…so the data can’t be applicable for a specific home or subdivision. For example, if you click the area that is supposed to be for Telfair, you will see it includes part of First Colony and those subdivisions are zoned to different schools than Telfair. (And trust me when I tell you that schools are one of the most important variables in determining home values in our area!)
Inaccurate Data Misleads People
Here’s my least favorite source of data (city-data)…notice they report only 9 registered sex offenders in all of 77479. We wish!
FamilyWatchDog reports and maps 64 (unfortunately)!
I REALLY don’t like most of the info on city-data because it reports information from any unknowledgeable “joe” who wants to put it up there. For example, I searched for “telfair sugar land demographics” on Google and the top entry was a city-data thread. In it, various and misleading demographics were reported…
Not accurate at all!
FBISD also consists of Houston addresses…not at all accurate stats for Sugar Land.
I think the City of Sugar Land has the best info on actual demographics for the city…they are getting it from the census data.
Each Neighborhood and Subdivision is Unique
The hard fact is that you can’t really get accurate census type data at the neighborhood or subdivision level. Relying on the data for an entire ZIP Code in our area may be very misleading when it comes to the neighbors you will eventually live next to. The best alternative is to look at the demographics for the Katy schools to which a home is zoned.
Only an Experienced Local Real Estate Agent Can Narrow and Focus Your Search
So if you are a home buyer in the Katy area, you really need the guided expertise of a local real estate agent you can trust to help you buy a home in the RIGHT neighborhood at the RIGHT price. No online searches available to the general public–including HAR.com, Trulia, Zillow, Homes.com–none of them will allow you to do the complicated and focused searches that a real estate agent can perform. Today (March 1, 2018) there are approximately 1291 active listings in Katy reported on the MLS. Do you want to sort through all of them or do you want to focus on the top 50 that most closely match your requirements?
Most Online Real Estate Pricing Data is Not Entirely Accurate and Should Not Be Relied Upon
Let me add that Texas is one of the few non-disclose states. That means that real estate data is not public information…so the online companies like Zillow and Trulia don’t have access to real data. They use tax appraisal values which are usually lower than actual home values. So don’t rely on them! And since online companies can’t get the real MLS data, they report erroneous information. Here’s an example…
Here’s the data reported on Redfin on October 15, 2013…which says it is for the last 90 days and focused on one of our most popular neighborhoods: Telfair.
I ran the sales history on the MLS for the last 90 days, and got the following data.
The top box is for Active Listings and the bottom box is for Sold properties.
So let’s look at the differences…
|Redfin Reported||MLS Reported|
|Median List Price||$502,946||$507,440|
|Median $/Sq Ft||$143||List = $143.68 but
Sold = $133.28!
|Avg # Offers||1.0||No way to know!|
|Avg Down Payment||20%||No way to know!|
|# Sold Homes||48||54|
My first complaint is that two reported variables are almost impossible to determine: Avg # Offers and Avg Down Payment.Agents do not report the number of offers on a home. They only have to report an offer when it is accepted and goes “Option Pending” or “Pending” (and sometimes they don’t even do that.) So that variable is completely unreliable and shouldn’t be reported at all.
The Avg Down Payment bothers me too. Agents are supposed to report that number at Closing (when a house sells), but you would have to look at every single transaction (54 over the past 90 days) to record those numbers. I don’t see how Redfin could automate that for every neighborhood…so I don’t trust that number either.
Notice the Median List Price is off by $4,500 and the # Sold Homes is off by 12.5 percent. Also, they report the Median $/SqFt for List Price only…but notice that the SOLD SalesPrice$/SqFt is $10.40 less! So if a buyer used the number Redfin reported to price a 3000sf home, that could have led to the buyer overpaying by $31,200!
NOTE: It really doesn’t matter what the median list price is for a neighborhood…only the sales price should be used to price a home you want to purchase.
And then that gets me into a price discussion which is too complicated to address here. But let me point out that this the median SalesPrice/SqFt and the house you may want to buy could be an above-average home or a below-average home. Do you want to pay the average price for a below-average home? Do you think a seller will accept an average price for an above-average home? The best way to get an accurate view of the value of a specific home at a certain time is to hire a professional appraiser or to engage a really good real estate agent. Not all real estate agents are good at pricing homes…you need a PRO!
Even Zillow Admits They Are Not That Accurate in the Houston Area
Just go to https://www.zillow.com/zestimate/#acc and see what Zillow says about it’s own accuracy.
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