>>SCOTT GAMM: All right joining
me now live on the floor of the New York Stock Exchange
is Zillow CEO Spencer Rascoff and Spencer I know you have
a pretty big announcement where someone could win a $1
million prize.>>SPENCER RASCOFF: Yeah.
This estimate is it really accurate computer model about
home values. But we think others can help
improve it even more so a year ago when we launched.
Estimates had a 14 percent error rate.
Now today a 5 percent error rate.
The Zillow prize allows data scientists computer engineers
statisticians economists anybody to compete if you can beat
this estimate and prove it than a million dollar prize at
the end of the contest. Details at Xillow.com/prize.
A lot of fine print of course but I’m excited about
what creativity and innovation that could unleash from others
working on the same problem that we’ve been working
on for 10 years.>>SCOTT GAMM: But the estimate
also includes artificial intelligence so what do you need
humans helping you out for.>>SPENCER RASCOFF: Well
you need humans to type to tell the robots what to do.
So I mean you’re right AI has dramatically improved
this estimate and cloud as well. So you know 10 years ago
the computational power that was going to the estimate
was I mean was just on a couple of dozen servers that we owned.
Today it’s all in the cloud so we’re able to use thousands
sometimes tens of thousands of computers millions
of different models and that burst computing on all
these interconnected cloud machines dramatically
peruses estimate. I mean the role of AI very very
very important. So we were an early leader and I
you know five to 10 years ago but so much has happened
with voice recognition and self-driving cars and so
many other AI technologies. We think someone out there
is working on something that has a technology that can be applied
to this estimate challenge this investment problem and they
should participate in this contest.>>SCOTT GAMM: Aside from the 1
milion dollar prize do they get a job if they do something
really cool.>>SPENCER RASCOFF: Yeah
I guess so. We hadn’t thought about that.
I guess I thought the million dollar prize would be
would be better. You know better
better motivation. But you’re right. Sure. Yes.
They also get a job. OK.>>SCOTT GAMM: That’s breaking
news here on the street. What jobs if you win the prize.
Yes. OK I want to say is anyone
who’s sort of living under a rock and doesn’t know what
this estimate is you can basically go to any address and
it will tell you what it’s worth.>>SPENCER RASCOFF: Yeah I mean
the idea of this estimate is we have a computer opinion about
every home in the country. So you know my house
is on Zillow his estimate you are on zillow.
You know everybody’s house has his estimate and.
It’s really valuable it’s useful for buyers and sellers but
it’s just a starting point. Right. It’s it’s an estimate.
It’s always going to be somewhat imperfect even with it even
though I expect this prize will improve accuracy more and more.
It’s always going be a starting point.
Real estate agent or is always going to help you be
more accurate. And honestly what a house
is worth is what a buyer will pay for it at the end of the day
that’s when a house is truly worth.>>SCOTT GAMM: All right we
should just note that there is a class action lawsuit
against the accuracy of this estimate.>>SPENCER RASCOFF: So there is
a lawsuit I mean Promina companies always get sued all
the time for everything. It’s there’s no merits
to a lawsuit. And I’m confident that it won’t
be an issue but it is true that. You know. Somebody has sued us.>>SCOTT GAMM: All right.
Well we just wanted to point that out.
Let’s also talk about housing prices while you’re here I mean
if you look at the market overall nationwide it’s really
hard to believe that there was a recession 10 years ago.>>SPENCER RASCOFF: We’re back
at peak value. So home values peaked in 07.
Huge recession. We’re back in a lot of cities
past peak. Now the good news before
you start saying oh this is a bubble. You know
the good news is the last peak in 07-08 was built
on a foundation of sand and that sand foundation
was a credit bubble. About 10 million people got
mortgages that really shouldn’t have gotten mortgages.
Today the reason we’re back at peak value is not because
of a credit bubble it’s because of an inventory shortage.
There’s just not enough homes out there to buy the existing
home sales data came out today. It was down month over month.
It was barely up year over year just not enough inventory
it’s a seller’s market. You’ve been thinking about
listing your home now is a good time because there are a lot
of buyers by you know demand far exceeds supply.>>SCOTT GAMM: Right now
the Federal Reserve is of course looking to raise interest rates
two more times this year does that help the market
in the sense that it gets people who are sitting on the sidelines
to kind of come in and say let me buy a home get a mortgage
before it becomes too expensive.>>SPENCER RASCOFF: You know
mortgage rates have been so low for so long that I tend to think
that most most of that behavior has already has already worked
its way through the system so we don’t see much impact right now
at mortgage rate levels that they’re out.
With respect to housing in fact even when the Fed if and when
the Fed raises rates and mortgage rates go up
a little bit we don’t think will impact housing very much
right now.>>SCOTT GAMM: Can you give us
your opinion on the millennial homebuyer we know they’ve been
a little bit late to the game to really pull the trigger late
to the game but they’re at the party.>>SPENCER RASCOFF: So you know
motto’s now make up around I think 46 percent or so of all
homebuyers So they are a huge part of the market.
The biggest demographic believe it or not. So it’s not true
the millennials don’t buy homes they do. And actually we just launched
a new brand called Real Estate com it’s another brand inside
the Zillow group family of brands real estate dot com
focuses exclusively on millennial homebuyers.
And one of the ways they do that is they let home shoppers
Millennial or or otherwise shop by down payment and monthly
monthly cost. So if you think about it I mean
it’s pretty abstract to say oh I can buy a $200,000 —
$250000 home. What does that really mean.
Most people know how much money they have available
for downpayment. How much money they can borrow
from their parents and how much their rent is. And so real
estate is the only real estate site that lets you actually shop
the way most people. Which is a down payment plus
monthly and there will be other initiatives that rules have
a calm launch to focus on millennials.>>SCOTT GAMM: That’s the first
one the site’s been up for about a week and it’s the rule
of thumb still 20 percent down on a home.>>SPENCER RASCOFF: Yeah there’s
not even any rule of thumb anymore. But yeah.
If you want a 30 year fixed then you probably don’t need 20
percent down. But there are FHA loans that are
one something percent down. So there are a lot of creative
ways to finance. Good advice to homebuyers
get pre-approved. Basically you shouldn’t even.
Really start thinking about shopping for a home.
Before you talk to a mortgage lender.
And you should research that online and you should also
research a real estate agent online.
You probably wouldn’t go to a restaurant or book a hotel
room without reading reviews and you shouldn’t hire a real estate
agent or a mortgage lender without reading reviews.>>SCOTT GAMM: All right.
Before we wrap it is college graduation season so do you have
any advice for the Class of 2017.>>SPENCER RASCOFF: I guess my
best career advice for a graduate would be
when you’re in a job. Look at the person 10 years
your future. So you know think to yourself Do
I want that person’s whole package.
They’re not just their compensation anyone who looks
at compensation. But their job their title
the respect they have in the community the type
of work that they do their work life balance their relationship
with family and friends. If you don’t want that.
To be your life will then switch you know switch careers
switch jobs. I know that’s I’ve done
that several times and it’s been really it’s been really valuable
for me.>>SCOTT GAMM: Some great advice
Spencer Rascoff CEO of Zillo. Thank you for joining. Us.
>>SPENCER RASCOFF: Thank you.