Source: https://www.linkedin.com/feed/update/urn%3Ali%3Ashare%3A6861600314252943360
Why Zillow’s #Prediction #Algorithm Lost Money on 93% Homes in Phoenix: https://lnkd.in/eqDiMDaU : #BTFD When #Price #Surge is Followed by #Slowing #Prices: #Zillow’s #algorithmic approach to #pricing #homes has struggled to accurately #predict #real #estate #prices at a time when #housing #values are rising. Faced with fastest-rising #real #estate #prices in history, Zillow tweaked the #algorithms that power its home-flipping operation to make #higher #offers. It ended up with so many #winning #bids that it had to stop making new offers on properties. Now, the company is working through a #backlog of houses that need to be fixed up and sold while facing an #unpleasant #reality: #Slowing #price #appreciation means it will sell many homes at a #loss.
Why #Models Behave #Badly: #Algorithms Go #Haywire?
• All #Data is About #Past… All #Decisions Are About #Future
• All #Models Are Wrong… All #AI #Algorithms Use #Models
• All #Risks Are Fragmented… #Success Depends On #RiskManagement:
https://lnkd.in/epbqDVX5:
Resolutions to Above Problems of #ModelRisk #AlgorithmRisk:
Princeton University Presentations on #ModelRiskManagement & #ModelRiskArbitrage: ModelRiskArbitrage.com .
Goldman Sachs & J.P. Morgan: #BeyondPrediction: #AnticipationOfSurprise:
#Anticipatory #Risk #Analytics… since 1993: FutureOfFinance.org: BRINT.com/blackswans.html :
The new #business #model of the #Information #Age, however, is marked by #fundamental, #not #incremental, #change. Businesses must shift to a more flexible ‘anticipation-of-surprise’ model. – Dr. Yogesh Malhotra AI-ML-Quant-Cyber-Crypto-Quantum-Risk-SME in #CIO #Magazine #interview, Sep. 15, 1999.
I’d just caution you that #models are #backward-looking. The #future isn’t the #past.– Jamie Dimon, Chairman & CEO, JPMorgan Chase & Co., US Senate Banking Committee hearing, June 13, 2012.
Zillow’s roughly 250 active #listings in #Phoenix are currently priced at 6% #less, on average, than what it paid for the homes. That amounts to a $29,000 discount on the typical property: “It’s like it’s making #decisions two to three months #too #late #relative to the #market.” Someone sold four-bedroom home in Phoenix to Zillow for $531,300 in late September at much higher offer than $504,000 solicited from a competitor. Ten days after Zillow bought the home, it listed the property for $505,900. When it didn’t sell, the company cut the price by another $11,000 to $494,900.
Zillow to lay off 25% of its #workforce and #shutter #house-#flipping #service: https://lnkd.in/eR5ZbBPV : #Explaining the abrupt move to pull the plug on the side business, called Zillow Offers, #CEO Rich Barton said the #unpredictability in #forecasting #home #prices far exceeds what we anticipated.
AIMLExchange.com : BRINT.com : C4I-Cyber.com
