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Life Decisions and Big Data
The current crisis will drive down home values, and we all wish we had a crystal ball that could tell us exactly when the numbers will be in our favor for that next big purchase.
The decision to buy a house will be the biggest purchase for many individuals. What if there was something that could help you know when the timing is right? Companies are using Big Data to invent new business models that do just that; Zillow, with its Zillow Home Value Index (ZHVI), puts together the median price (Zestimates) for homes in a specific area code on a given day in real-time.
What value does Zillow create?
By analyzing their vast pool of data Zestimates can calculate median listing prices, percentage of listings with price reductions, monthly listings, price-to-rent ratios -- crucial areas to know if you are buying or selling at the perfect time.
Zestimates are not the same as appraisals. According to Zillow’s website, a Zestimates will estimate a home’s market value, based on information such as location, market conditions and recent transactions. Then you can see -- with a median error listed -- the amount of homes with Zestimates in a given area and how close the calculated amount is to what it sold for.
How do they do it?
Zillow’s site lists it has Zestimates for more than 97.5 million of the 110 million U.S. homes. The amount is calculated by an algorithm which includes county data, tax assessor records, and specific facts about a house such as square footage, number of bathrooms, or even types of counter-tops. It also factors in comparable homes in the area and the amount of time spent on the market.
What if this was available for more than just houses? What if there was data that showed when the price of a specific car at a dealership could be expected to be raised and lowered? Or vacations? What if based on the average price for different months of year, you could know what month is the cheapest to book a trip to your favorite getaway or the best time to upgrade your technology?
Big Data is giving companies the tools to make anyone a savvy consumer. Is your company providing its clients with insights and value based on the data you’ve collected? Contact us to learn more about Big Data and put together a plan to offer value to your customers in new and innovative ways.