they are rezillowists.
they used to have my house peaking at about 450k. now they say it peaked at 360k. probably it peaked around 425-500 (a smaller house that hadn't any work done on it since 1950 on a lesser lot just 4 houses down from me went for over 550 but i suspect scam). i noticed the rezillowism about half a year ago.
just to check, here's a graph of the guy across street from me who just paid $625 for a house which the previous owner added to & fixed up. it sold for about $375 as a total dump in 2004. up until this recent sale, zillow had it previously peaking in the 300's if i remember right, certainly not in the 5 or 600s as it shows now.
while i don't see an explanation for their rezillowistic approach to home value histories, they do mention their inaccuracy here Data Coverage and Zestimate Accuracy | Zillow Real Estate
giving themselves only 2 stars for my area out of a possible 4-star rating.
edit: this is so odd. just checked another neighbor who just sold another fixed up house, cattycorner to me & nextdoor to the guy in above example. only here i guess they forgot to rezillow the history quite like they did with the first guy.
what zillow fails to report is that had either of the above two houses been completed and sold by peak bubble they'd have fetched near or over $1mm. both sold under some duress.