Yay for Zillow?

So the house next to ours is up for sale.  249 days ago, it was listed at $249,000.  Then it was at $235K, then $225K, then $215K.  Now it's down to $208K.  So my Zillow value could have been going down, but it didn't.  But now they are developing the lot next to that house.  That house will probably be listed at $339,000.  If the same law applies, will it go down?  It doesn't matter to us a ton because we aren't going to sell anytime soon, but I just love all the math that goes into a house "value!"