As the US housing market began to overheat, in February Zillow began making initial cash offers to buy homes based on its price estimate. Now Zillow has updated its algorithm behind those estimates in a way the company says will make them more accurate—and allow Zillow to offer to buy more homes.
Zillow previously determined the value of homes using nearly 1,000 variations of algorithms derived for local markets. Now all prices nationwide will be decided by a single neural network. Zillow says the new algorithm will reduce its price estimate errors by 11.5 percent for off-market homes in nearly 30 regions across the US. Compared with the previous version of the algorithm, errors shrank the most in Phoenix, followed by San Antonio, Tampa, and Houston.
Despite what the Wall Street Journal or Bloomberg Opinion might have you think, no one actually desires or prefers a housing economy consisting of majority rentals; in fact, robbing Americans of the easiest way to increase their assets (and as a result, forcing them to make higher monthly payments to increase the value of someone else's assets) is probably not going to be a great long-term plan for equality and prosperity, as our old pal Feudalism could tell you. While it's true that huge faceless companies like Zillow and Black Rock are buying up homes en masse is not great, it also might not be as big of a problem for the ongoing housing crisis as, say, NIMBYism.
But either way: I'm not convinced that AI will do anything to improve that situation for anyone.
Zillow Taps AI to Improve Its Home Value Estimates [Khari Johnson / Wired]
BlackRock is not ruining the US housing market [Derek Thompson / The Atlantic]
Image: Jon Evan / Flickr (CC-BY-SA 2.0) and Mike McKenzie / Flickr (CC-BY-SA 2.0), modified