CXO

Welcome to data transparency in real estate, where possibilities and challenges await

Zillow CEO and its chief economist discuss how the home and real estate marketplace company is starting to use and share open data and what thorny ethical dilemmas might be ahead.

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Image: iStock/opera3d

Purchasing a home is the biggest financial decision most people will ever make. As a result, most potential homeowners are voracious consumers of information, as are more speculative buyers for real estate in general. This has created a considerable business opportunity for entrepreneurs who can connect people shopping for homes with better, more contextualized results for their searches.

The internet has transformed how people shop for just about everything, from cars to health insurance to consumer goods. According to the National Association of Realtors, more than 90% of consumers now begin their search for a home online. New sources of data and powerful mobile devices are giving shoppers more contextualized information about homes all around them. In the near future, data could also tell potential buyers more about the people who lived in the house and the lives they lived there.

Last month, the Advisory Committee to the Congressional Internet Caucus hosted a forum on open data in the United States Congress that featured a conversation between Zillow CEO Spencer Rascoff and yours truly. We talked about the potential and challenges of opening up data about housing and making the real estate market more transparent, along with many other issues. You can watch the interview with Rascoff on YouTube or in the embedded video below.

Open government data powers Zillow's ability to give consumers more insight into the real estate market. They are a clear winner in the emerging open data economy, benefitting from government data releases from multiple agencies. Given the benefits that more releases provide to his company, it was no surprise to hear Rascoff support more of them.

"When data is readily available and free in a particular market, whether it is real estate or stocks, good things happen for consumers," he said.

He also confirmed the more complicated reality behind agencies publishing open data: aside from the U.S. Census Bureau, which continues to set a high standard for government disclosures of data, the quality of data that Zillow receives isn't great.

He predicted that companies that depend upon repackaging and reselling data without adding value to it are going to be in trouble in the future.

"Anyone whose business model is predicated on the assumption that their secret data will remain secret and proprietary, that's not a sustainable business model," said Rascoff. "This data will inevitably be free."

When I spoke with Stan Humphries, Zillow's chief economist, in Washington this month, I also learned that Zillow data is flowing the other direction and being used by government, including the Federal Reserve.

As Humphries reminded me, Zillow publishes open data on its website for everyone to use, from government to industry to journalists. Zillow's data and research (PDF) was used by the U.S. Department of Housing and Urban Development (HUD) to demonstrate and highlight inequality in the housing market for minorities.

In the video below, HUD Secretary Shaun Donovan discusses the findings of the report.

As I said in the U.S. House of Representatives, I think the issues Rascoff and I discussed are important context for anyone seeking to understand the intersection of technology, society, and policy, particularly with respect to the power that private companies now hold to obfuscate or display information to tens of millions of their users.

As I wrote last week, disruptive technologies pose difficult ethical questions for society. Making public records more searchable on an online map or mobile application involves complicated ethical decisions, whether data journalists, activists, or tech companies are making the call.

"An idea often starts with a broad vision about a dataset and a public benefit," said John Wonderlich, policy director for the Sunlight Foundation, in an interview. Sunlight cleans and publishes immense amounts of open government data in its tools. "In designing a website and thinking about how to present information, we end up with dealing with lots of harder questions about power, inequality, and lots of consequences in the real world. You have to be thoughtful."

Whether an entity includes a given data set or not can have a huge impact upon the people, businesses, or services it describes, for good or ill.

"Data and technology do not have independent agency; they embody the agendas of their designers and creators," wrote my colleague, Columbia Journalism professor Susan McGregor. "If, as journalists, consumers, and citizens, we fail to use these products in a way that meets our own objectives, then our work will almost surely end up serving someone else's."

Rascoff demonstrated that Zillow is thinking about the ethicality of adding different data sets to its products. For instance, when Zillow added public data on homes in foreclosure that were not yet available for sale in 2012, it raised privacy concerns and led to criticism about "reckless profiteering." Rascoff refuted those claims, asserting that Zillow was removing an asynchrony in the housing market.

"We decided that it is valuable information to the efficient functioning of that local marketplace," Rascoff said. "[A buyer's] right to know that there is a house on their street that is going to materially impact the value of an asset that they are considering purchasing, that is a significant benefit to that buyer."

Zillow has also decided not to publish certain data. For instance, Rascoff said that they don't include data concerning the mortgage amount at the time of origination or the names of property owners.

"When we had the discussion seven years ago around names, whether we should include it at launch, there was no debate in the room — 'Of course not, we absolutely shouldn't [publish] the name of the property owner,'" he said.

Maybe Zillow should publish names in the future, he mused, given that people can get that data from local county records. "We still haven't done it, but I do suspect at some point we'll cross that line."

More ethical decisions for the company are ahead, from integrating data from sex offender registries, or environmental data about hydraulic fracturing or "fracking." Rascoff told me that he was "absolutely" in favor of identifying the homes where owners have licensed drilling rights to allow fracking below the property.

Notably, he also said that Zillow might map political contributions on to housing.

"That's something that the legislators have decided should be publicly available," he said. "I don't think it presents a public safety issue."

More data integration will definitely be coming. When I asked Rascoff about new climate data releases, for instance, he expressed interest. What Zillow chooses to add will instantly have an impact at scale: its mobile devices and websites receive 76 million visits every month.

"I've got a whole list now of things we've got to go back and build," Rascoff told me. "...These are the types of ideas that end up kind of below the cut line, when you sit in prioritization meetings about what you work on over the next three months. No one of them really moves the needle in a big way, but in the aggregate, they make a web service like Zillow much more useful."

About Alex Howard

Alex Howard writes about how shifts in technology are changing government and society. A former fellow at Harvard and Columbia, he is the founder of "E Pluribus Unum," a blog focused on open government and technology.

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