February 12, 2006

The Algebra of Real Estate

Long before the web existed, I was a math teacher... the first job I ever loved. Sometimes I wish I could return to that now that there are so many cool new things to inflict math on. The latest case in point: Zillow.com.

Try it out. Type in your home address and see how much it says that your house is worth. What about your neighbors? Your old boy friend? The house you grew up in?

Clearly, since most homes are not actually on the market, there is some math going on in the background to estimate these prices. Wouldn't it be a terrific inquiry exercise to try to figure out what the underlying equations are? Zillow gives you the lot size, house size, number of bathrooms and bedrooms and year built. For a given neighborhood, could you hold everything constant except for one of these and plot that against the price? Could you develop equations that show the value of adding a bedroom? If there are outliers, is there an explanation based on location within the neighborhood?

Could be fun.

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2 Comments:

At 8:03 PM, KLG said...

I checked my neighborhood - they're not estimating values, they're using the reported property taxes collected in 2004 - probably have access to the county and state tax database under open records. Their map is off, too - they have my house marked as the one two doors down. Not their fault, though - the US Census bureau didn't have it right either, and this is a 20 year old neighborhood.

 
At 3:38 PM, Book Worm at the Beach said...

hey Bernie,

I'm not a math person (I'm a future English teacher), but I still found Zillow.com really interesting. If we did word problems in math based on stuff like this, I probably would have done better in math overall.

The values seem to be off by about 25% though (at least in my neighborhood). The details about the properties like square feet and rooms, etc. was interesting.

~RD

 

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