Los Altos Real Estate Blog

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Skip the ZIP in market reports

The local paper wrote a nice article recently about the sharp rise of Silicon Valley property prices.  Among the cited towns were Atherton (94027) and Palo Alto (9430x).  There was some mention of Los Altos and a few other markets.  Their analysis was broken down by ZIP codes and several of their figures were just plain wrong.  When you're writing about real estate markets, SKIP THE ZIP.

A ZIP code often contains a combination of geographic areas including multiple towns, a mix of neighborhoods in a single town, a whole town (rare), or a mix of areas.  ZIP codes seldom reflect accurate neighborhoods and hyperlocal markets.  Often ZIP code reports will mix strong markets with weak ones, giving a false impression of how strong or weak a market is.  Here are a few tips:

Agents - Report on towns and/or neighborhoods.  SKIP THE ZIP because using ZIP codes in market reports can be misleading.  This will vary from market to market but generally in Silicon Valley it's better to report on neighborhoods or specific towns.

Consumers - Market reports that focus on specific towns or neighborhoods will give a more accurate portrayal of local real estate.  When reading market reports, be aware that a ZIP code may include more than one neighborhood which could skew results.

Examples of the flaws you'll find in ZIP code based market reports and statistics for Silicon Valley:

  • ZIP code 94022 includes both Los Altos and Los Altos Hills.  Los Altos, with an average price of abotu $2 million, isn't as pricey as Los Altos Hills and does more volume.  Lumping the two areas together makes Los Altos Hills look weaker than it is.
  • ZIP code 94040 in Mountain View includes neighborhoods such as Waverly Park, Cuesta Park, and Varsity Park each with substantially different price points.  Even the schools are different and schools drive pricing!

My market reports always focus on a town in general or a neighborhood.  My blog contains town-based market reports.  My clients get neighborhood reports.  If you want to know how well a market is doing, you, as the consumer, are better off getting a report about the neighborhood you want to buy in.  Call me, become my client, and that's what you get as part of my services.

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 Bryan Robertson, CEO | T: 650.799.9951 | Email: bryan@catarra-re.com | Website: http://www.BryanRobertsonHomes.com |CA BRE# 01191946 | Catarra Real Estate, Inc  | 171 Main St #220 | Los Altos, CA 94022

 

 

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Comment balloon 31 commentsBryan Robertson • April 17 2012 06:28AM

Comments

Good suggestion about not using the zip code.  Thanks for sharing.

Posted by Edward & Celia Maddox, EXPERIENCE & INTEGRITY - WE TAKE THE HIGH ROAD (The Celtic Connection Realty) over 6 years ago

Thanks for the heads up.  I will discontinue the zip code on my market reports.  In fact I'll try to find time to remove them from my past posts.  Suggested.

Posted by John McCormack, AlbuquerqueHomes.com, Albuquerque Homes Realty (Albuquerque Homes Realty * www.AlbuquerqueHomes.com) over 6 years ago

Bryan, I've typically focused on school districts overall, which may or may not have multiple zips.  Even then, within a school district we've got some pretty significant disparity in subdivisions, and subdivision vs. rural properties.  Always a battle to find the right balance.

Posted by Liz and Bill Spear, RE/MAX Elite Warren County OH (Cincinnati/Dayton) (RE/MAX Elite 513.520.5305 www.LizTour.com) over 6 years ago

In our area they are great. Often consumers do search by zip code and different zips in the same city make a huge difference. But that said....I get what you are saying. Each market is unique

Posted by Karen Fiddler, Broker/Owner, Orange County & Lake Arrowhead, CA (949)510-2395 (Karen Parsons-Fiddler, Broker 949-510-2395) over 6 years ago

Good point Bryan. I dont do Market Reports, but if I did this would be a good tip.

Posted by John Cannata, Texas Home Mortgage - Purchase or Refinance (214-728-0449 http://TexasLoanGuy.com) over 6 years ago

Thank you Bryan - you have a great point. We have reports on Market Leader so I will be delving into that once I get my license. :)

Posted by Lynda White, Admin. Mgr., Keller Williams Realty (Bluegrass Homes & Farms Realty, Agent Know How) over 6 years ago

Bryan,

You are right on the money with this blog. A zip code market report from my area would make absolutely no sense whatsoever. I would be wasting my time putting this together.

Posted by Robert Bob Gilbert, Your Katy TX ( West of Houston) Real Estate Expert (Berkshire Hathaway HomeServices Anderson Properties) over 6 years ago

Bryan - I agree!  Real estate results strictly by zip code can be a big mistake.  Tracking real estate results by neighborhood and then comparing to the general area trend is a much better way to show results to the consumer!

Posted by Laura Allen, Lake Tahoe - Truckee Real Estate for Sale www.TahoeLauraLuxuryHomes.com, Tahoe Real Estate Agent Helping Buyers and Sellers (Coldwell Banker, Tahoe City, CA (530) 414-1260) over 6 years ago

I just started including zip codes in my market reports after reading other market reports. Your logic seems sound, so off they go!

Posted by Doug Rogers, Your Alexandria Louisiana Agent (Bayou Properties) over 6 years ago

Hi Bryan - You're right. At least here in our market, buyers do not think in zipese. I can't remember any buyer ever indicating a preference for or against any zip code in our two-county market area. They just don't correspond well to any kind of housing characteristics or categories.

 

Posted by Dick Greenberg, Northern Colorado Residential Real Estate (New Paradigm Partners LLC) over 6 years ago

Good point Bryan.  I don't use zip codes in my reports either.   Most buyers don't think in terms of zip codes when looking for homes either.  

Posted by Jim Patton, Realtor - Stanislaus & Merced county Realtor. (Century 21 M&M - 209-404-0816) over 6 years ago

This is a tough one here.  There are only a few areas that accurately reflect one neighborhood and I use them because the MLS area is even worse.  Also we have some cities with several zip codes so I break them down that way.  The rest of the zip codes do not work well.

Posted by Jane Peters, Connecting you to the L.A. real estate market (Home Jane Realty) over 6 years ago

Bryan you said that ZIP code 94022 includes both Los Altos and Los Altos Hills. One of the cities that I target in Prince George's County MD is Bowie MD. Bowie MD has four zip codes 20715,20716,20720 and 20721. Sometimes people want to do searches by zipcode. I guess we can blame Zillow for that:-)

Posted by Lanre-"THE REAL ESTATE FARMER" Folayan, I don't make promises.I deliver results.SOLD HOMES (Keller Williams Select Realtors-Buy a home in Washington DC. Sell a home in Washington DC) over 6 years ago

Hi Bryan, I agree.  In my market the same zip code could include data about upscale waterfront homes as well as more modest manufactured homes in a 55+ community... it would totally distort the picture if we were to lump them together.

Posted by Silvia Dukes PA, Broker Associate, CRS, CIPS, SRES, Florida Waterfront and Country Club Living (Tropic Shores Realty - Ich spreche Deutsch!) over 6 years ago

So true Bryan, I use neighborhoods. But when the prospective buyers are not familiar with or know any of the neighborhood names, sometimes you have to go with a zip.

Posted by Sandy Acevedo, RE/MAX Masters, Inland Empire Homes for Sale (951-290-8588) over 6 years ago

In Manhattan zip codes can cover a few blocks before they switch, it's very important to learn the best ways to utilize a zip code in our own market areas.

Posted by Morgan Evans, LICENSED REAL ESTATE SALESPERSON (Douglas Elliman Real Estate) over 6 years ago

Bryan, zip codes are best for describing broad areas where someone might want to live, but you are so right, they can skew data and make a strong neighborhood look weaker than it is by virture of aggregating everything else in the zip code.

Sharon

 

Posted by Sharon Alters, Realtor - Homes for Sale Fleming Island FL (Coldwell Banker Vanguard Realty - 904-673-2308) over 6 years ago

Thanks for the great information.  I would never have given that much thought.

Posted by Ron Marshall, Birdhouse Builder Extraordinaire (Marshall Enterprises) over 6 years ago

we only have one zip code  my county, and one town and neighborhoods not large enough for individual market reports.  Just goes to show again... real estate is local.

Posted by Tammy Lankford,, Broker GA Lake Sinclair/Eatonton/Milledgeville (Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668) over 6 years ago

Bryan, I live in a Zip Code that contains 1000 square foot Duplexes, 2500 sf Single Family Houses, an older neighborhood of single-wide Mobile Homes, and several houses on the lakes that are worth multi-millions.  It would be absurd to do a market report based on the Zip Code.

Posted by Fred Griffin, Licensed Florida Real Estate Broker (Fred Griffin Real Estate) over 6 years ago

Bryan - I think that breaking it down to neighborhoods is the best way to get an accurate read on the market.

Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) over 6 years ago

As rural as we are, a zip code would cover a very LARGE area.  You could go from single wide mobile homes, to waterfrong on Lake Livingston, to working ranches. Not a good idea here, for sure!

Posted by Joni Bailey, Your Huntsville / Lake Livingston Area REALTOR® (Berkshire Hathaway Home Services - Anderson Properties) over 6 years ago

Hey Bryan,

Zip codes can be effective in Georgia for market reports.  Schools are important and lots of buyers search by school when children are involved.  Many of my buyers were single with no immediate plans for children, so schools are not at the top of their list.

Good information.  Best of success to you this year!

Posted by Jordon Wheeler, J W Group Real Estate Sales and Service (The Jordon Wheeler Group) over 6 years ago

Bryan:

Market reports in my city because we just have two.  The second zip code is comprised mostly of very similar homes.  But you are correct, it is best to do market reports for neighborhoods, because that is what most people want.

Posted by Evelyn Kennedy, Alameda, Real Estate, Alameda, CA (Alain Pinel Realtors) over 6 years ago

I even have trouble in our area with reporting on a whole city....neighborhoods can vary so much in my part of Virginia.

Posted by Kathryn Maguire, Serving Chesapeake, Norfolk, VA Beach (GreatNorfolkHomes.com (757) 560-0881) over 6 years ago

As you suggest, real estate is much more local than zip code. To make market reports meaningful you need to drill down much more specifically in many cases.

Posted by Susan Thompson-Solomons, Southern MD Real Estate-Solomons Specialist (Berkshire Hathaway Home Services McNelis Group Properties) over 6 years ago

All real estate is local, and what's true in your area may not be true in another.  Of course, many zip codes include high-end and low-end properties, detached and attached homes, but a statistical report that doesn't include enough homes to even track the ups and downs is useless. 

In my market area, there are entire zip codes that have zero turnover in some months... 3-5 homes close in other months...  If I were to follow your advise, I couldn't publish anything that would help people in that local area.  Publishing a zip code report allows me to add narrative that puts this area in perspective with other local areas.  Since I started doing this, I've had three high-end listings directly from my market reports.  Good thing I'm not following the market report advice of an agent in California!  Again, real estate is local.

Posted by Margaret Woda, Maryland Real Estate & Military Relocation (Long & Foster Real Estate, Inc.) over 6 years ago
Wow, the zips are so entrenched in the way we receive our data here from MLS that there is almost no way to undo it all. Good thought to ponder, though.
Posted by Cheryl Ritchie, Southern Maryland 301-980-7566 (RE/MAX Leading Edge www.GoldenResults.com) over 6 years ago

Hi Bryan,

I think people use zip codes because the data is readily available that way. It's a little more work to do a MLS search by town and pull our own data. Our MLS also allows map searches, we just draw a line around an area and pull up all listed, sold etc.

I am considering a Market Leader website and I see they do everything by zip. I am in a small town that the Postal Service has divided into 2 different zips. The whole town is in the same school district and everything else is similar. The Market Leader neighborhood info makes one half of the town look great and the other half look bad. I guess half my listings should be entered in the MLS with the wrong zip to not scare away buyers searching on a Market Leader website.

I don't mean to be picking on Market Leader, I'm sure other websites with neighborhood info do the same thing. I haven't yet checked other providers.

Posted by Wayne Jackson, North Idaho Realtor, Serving Coeur dnullAlene and Hayden Lake (Lakeshore Realty 208-714-4109) over 6 years ago

I guess it would depend on the zip code. There are some people who want to live in a certain zip code. The neighborhood is know by the zip code.

 Buy in most areas it can be misleading and information may be inaccurate. eg There are two different school districts in a particular zip code and prices and taxes are quite different. We would not have te true picture if I wrote a market report based on zip code for this one.

Good post

Posted by Gita Bantwal, REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel (RE/MAX Centre Realtors) over 6 years ago

In some areas zip codes mean a lot, and in other areas, they are meaningless. I have examples of both in my market.

In the city of Mt. Vernon, the 10552 zip code is high end. Anything there means something.

In Scarsdale, a much higher end location, the zip code is bigger than the village (and school district). So if you see a Scardale address, you need to make sure that the home is in the VILLAGE of Scarsdale and in the Scarsdale SCHOOL DISTRICT. The zip code is meaningless.

As a general rule, I would say its more important to search by school district than zip code!

Posted by Donald Reich (Prudential Centennial) over 6 years ago

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