Zillow has said its launching a new Zillow Prize contest, offering an award of $1 million to the first person or team who can most improve the Zestimate algorithm, which is Zillow's proprietary home valuation tool. The Zillow Prize contest calls for data scientists, engineers and visionaries to compete to improve automated home valuations of 110 million homes across the U.S.
Designed to be a starting point to help people estimate the value of a home when it launched in 2006, the Zestimate home valuation marked the first time homeowners had instant access to information about their homes' estimated values, for free. Prior to the Zestimate, only appraisers, mortgages lenders and professional real estate agents had access to computer valuations of homes – never homeowners or prospective buyers.
To homeowners, sellers and buyers, the Zestimate home valuation remains an important data point. Combined with other information, like recent home sales, and the guidance of real estate professionals, the Zestimate helps consumers make smarter financial decisions about their homes.
To data scientists, the Zestimate home valuation is known as the ultimate algorithm, one of the highest-profile, most accurate and sophisticated examples of machine learning. Zillow Prize will mark the first time that a portion of the proprietary data that powers the Zestimate home valuation will be available to individuals outside of Zillow.
Zillow's data science team continually works to improve the accuracy of the Zestimate home valuation, as measured by how close the Zestimate is to the eventual sale price of a home. The U.S. median absolute percent error currently stands at 5 percent, improved from 14 percent in 2006.
"We still spend enormous resources on improving the Zestimate, and are proud that with advancements in machine learning and cloud computing, we've brought the error rate down to 5 percent nationwide," said Stan Humphries, creator of the Zestimate home valuation and Zillow Group chief analytics officer. "While that error rate is incredibly low, we know the next round of innovation will come from imaginative solutions involving everything from deep learning to hyperlocal data sets -- the type of work perfect for crowdsourcing within a competitive environment."
The contest is being administered by Kaggle, a platform designed to connect data scientists with complex machine learning problems. It will be staggered into two rounds, the public qualifying round which opens today and concludes Jan. 17, 2018 and a private final round that kicks off Feb. 1, 2018 and ends Jan. 15, 2019.
Contest participants have until Oct. 16, 2017 to register for the qualifying round, download and explore the competition data setiii, and develop a model to improve the Zestimate residual error. The top 100 teams from the qualifying round, those whose solutions most reduce the difference between the Zestimate home valuation and the actual sale price of the homes within the dataset, will be invited to participate in the final round and compete for the $1 million dollar prize.
In the final round, the winning team must build an algorithm to predict the actual sale price itself, using innovative data sources to engineer new features that will give the model an edge over other competitors. The home value predictions from each algorithm submission will be evaluated against real-time home sales in August through October 2018. To take home the $1 million dollar grand prize, the winning algorithm must beat Zillow's benchmark accuracy on the final round competition data setiv and enhance the accuracy further than any other competitor. A $100,000 second place prize and $50,000 third place prize will also be awarded in the final round. A total of $50,000 will also be awarded to the top three ranking teams in the qualifying round.
Zillow publishes Zestimates on more than 110 million homes across the country based on 7.5 million statistical and machine learning models that examine hundreds of data points on each individual home.
To calculate the Zestimate home valuation, Zillow uses data from county and tax assessor records, and direct feeds from hundreds of multiple listing services and brokerages. Additionally, homeowners have the ability to update facts about their homes and see an immediate change to their Zestimate. More than 70 million homes on Zillow have been updated by the community of users.