The Revitalist

The NY Times reports on a complaint filed by the National Community Reinvestment Coalition against Zillow that alleges racial and class discrimination. The NCRC alleges that "Zillow is placing the American dream of homeownership at risk for countless working families" by undervaluing homes in low-income and minority neighborhoods and misrepresenting the accuracy of their valuations. Zillow says that their "zestimates" are determined based on public data (recent sales, tax assessments, deed registrations, etc.) and that they do not use demographic data in their algorithm. They also rank their accuracy by comparing zestimates with actual sales figures. The accuracy varies place to place (obviously they are more accurate where there is more sales data), but the rating is clearly available on their website for the locale where you are searching.

Seems to me that this is a web literacy issue. Zillow is meant to be a tool for individuals to use to yardstick the info they are getting from their real estate agents and for general research. People on the web have to use these tools critically and to judge for themselves the accuracy of the info. We harp on our kids about research on the web and how to judge a site's credibility – this is a reminder that adults need to apply the same scrutiny. As for the undervaluation of low-income/minority neighborhoods, if Zillow doesn't use demographic data, then you can't accuse them of bias. If the actual sales info reflects a larger bias in the market, then that's a different problem.