Zillow’s stock has plunged, losing 65% of its value over the last 5 years. To put this in perspective, the Nasdaq 100 has doubled during this same period. Why is Zillow, who was once an internet darling, now falling precipitously? What does this mean for the broader real estate market and real estate brokerages? Hint, the reason isn’t because of declining transaction volume there is something much bigger occurring.
Why is Zillow’s stock suddenly plunging?
Google is currently running tests on putting real estate sale listings into its search results. Over the weekend, real estate tech strategist Mike DelPrete published mobile phone screenshots of Google Search results showing real estate listings, which appeared to be powered by real estate data company HouseCanary. The listings enabled users to view the full details of a property’s page, request a tour and contact an agent — similar to the functions offered on Zillow.com’s online marketplace portal. Google’s home searches appear to work only in select markets and on mobile devices as testing is underway.
Websites throughout the internet have been reeling as google is pulling more information into the search results greatly reducing the website visits. The same is happening with Zillow, if you can google an address and get all the information up front within google, then what is the need for Zillow?
Real estate listings just the beginning for google
It was said in the past that whoever owned the data owned the eyeballs, but the tide has changed. The google strategy to increase the effectiveness of their search results will upend long held beliefs. Google is just “testing” out real estate listings, but very soon I’m sure google will make even larger changes.
Why couldn’t google not only pull the listing information but using an AI model also pull the property history (how long it has been listed, when it was last sold, tax value, etc…) along with various estimates from Realtor.com, Zillow, etc…? This information would basically make sites like Zillow worthless as you can get better information from multiple sources in one place
Google will commoditize real estate information
Zillow has banked on having the largest source of home information as the backbone to its business model, driving huge advertising from realtors. Note, in the article I’m focusing on Zillow, but others like Realtor.com will face similar fates. The data is now a commodity that is being used freely throughout the internet with no huge differentiation amongst providers.
How will Google’s real estate information impact Realtors and Lenders
Unfortunately now google will have the eyeballs which means that advertising and leads will shift dramatically. Realtors and Lenders that have relied on qualified leads from Zillow will now have to rely on Google and also face the prospect that these leads might no longer be available.
Furthermore, by Google entering the real estate listing market this will further industry consolidation. Real estate brokerage consolidation is growing industry trend where large firms are acquiring smaller ones, creating bigger players (like Compass, Anywhere, eXp) gaining market share, driven by tech, scale, and tough markets, leading to agent mobility, MLS consolidation. This “bigger is better” wave aims for broader reach, data power, and seamless digital experiences, the real estate consolidation will mimic banking where there are a couple of huge players like Chase, Bank of America, etc.. and some regional/local players.
In Real Estate whomever holds the data holds the gold
In real estate, the companies that hold the data and have the eyeballs are the ultimate winners. Think of the evolution of Zillow over the last 10 years, a prospect could go to Zillow to look at a house, book an appointment, and be matched with a realtor or a lender. Now this whole process is on a platform like google which means larger companies with deep pockets will spend heavily to gain these leads. Zillow, Realtor.com, and others will be sidelined with the new changes on Google.
Although Google will not eliminate realtors, the huge changes caused by Google will supercharge an increased wave of industry consolidation with the big getting bigger and basically the middle getting consolidated with a few small players left. This is exactly what has occurred in banking. Many realtors must either become a niche player or join a larger firm. We are just at the beginning of huge changes because of Google consolidating real estate listing information.
Additional Reading/Resources:
https://www.fairviewlending.com/when-will-real-estate-crash-or-will-it/
https://www.fairviewlending.com/large-investors-must-sell-properties/
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Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner. I’m not an armchair reporter/writer. We are an actual private lender, lending our own money. We service our own loans and own commercial and residential real estate throughout the country.
My day job is and continues to be private real estate lending/ hard money lending which enables me to have a unique perspective on the market. I don’t accept any paid sponsorships or ads on my blog to ensure accurate information. I’ve been writing this for almost 20 years and have over 30k subscribers. Please like and share my blogs on linkedin, twitter, facebook, and other social media and forward to your friends 😊. I would greatly appreciate it.
Fairview is a hard money lender specializing in private money loans / non-bank real estate loans in Georgia, Colorado, and Florida. We are recognized in the industry as the leader in hard money lending/ Private Lending with no upfront fees or any other games. We fund our own loans and provide honest answers quickly. Learn more about Hard Money Lending through our free Hard Money Guide. To get started on a loan all we need is our simple one page application (no upfront fees or other games). Learn how to find a reputable hard money lender and why Fairview is the best hard money lender for investors.
Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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