The last time the real estate market crashed in the early 90s, somebody estimated that it took over 18 months for the fact to dawn on the masses that prices were collapsing. That makes sense when you consider that information was on one-way pipe from realtors, the financial markets and the media to the mass market "audience" consuming newspapers and TV shows. This time, I have to wonder if it won't happen faster - a whole lot faster. Consider how much things have changed. The entire MLS is available online, ziprealty.com tracks price reductions in real time, zillow.com offers instant "Zestimates" of a home's real value in a way-cool graphical context (check out those "bird's eye" views), and dozens of blogs not only discuss the impending crash, they offer near daily reams of won't-find-anywhere-else insightful and scary analysis. It's a pretty safe prediction that the bumpy landings now unfolding in California, Florida, Phoenix, D.C., Boston, et. al. are happening faster because the data are online, unfiltered and freely accessible. In fact, the bloggers have been at it for months - but it was only yesterday (July 29, 2006) that my favorite old media of record New York Times made it official in a great front-page, above the fold, far left column, it just doesn't get any better than this piece on "Housing Slows, Taking Big Toll on the Economy." HELLO! Meanwhile, in the blogosphere, the data's been collecting dust since around this time last year (which, by the way, has made it perfectly clear that if you bought last summer, congratulations - you hit the peak!); more recent analyses - say in the last few weeks give or take, are accompanied by ominous blogging of a recession in Q1 2007. You know it's going to be much much worse than the "soft landing" the real estate industry was hoping for when there are suddenly a handful of blogs chronicling California flippers in deep trouble (the messy Forsaken Craft featuring Temecula/Murrieta; LA's It's Just Money; Irvine's OC Flip Track; the widely followed Flippers in Trouble covering Sacramento, and the just plain sad SD Price Monitor chronicling the bust of the downtown San Diego condo market. Check out just a few of my favorites:
- Bubble Markets Inventory Tracking (comprehensive inventory data for the Western U.S.- why doesn't the real estate industry do this?)
- Housing Tracker (median prices and inventory for major U.S. cities)
- Bubble Meter (BubbleSphere Roundup is especially interesting)
- Calculated Risk (decidedly political economic focus on real estate bubble)
- South Bay Beaches Housing Bubble (very witty - fun photos of the "condo twirler" which has everyone in stitches)
- HouseBubble.com (compilation of news articles related to the U.S. housing bubble - increasingly depressing)
Bottom line: The Internet is going to radically change the real estate industry - inside the space of another year or two, it will not be recognizable. Comments?
20 comments ↓
Very entertaining issue. I haven’t heard of this one. It will be necessary to visit you on a thicket!
Nice article. I agree that the advent of new online technologies will certainly speed up the real estate slowdown. People no longer have to wait to find out what other markets are doing. They can now find out instantaneously. Blogs are going to do to real estate what they have done for the news. They will put it back in the hands of the people. Real estate agents can no longer get away with mis-truths - tell me about a hot market and I’ll show you 5 bloggers who are explaining exactly why it is not.
The democratization of real estate is upon us!
Nice article, blogging is giving the common people a voice which is great in many instances but not in economics(the common man is not educated in economics or the realestate industry). Leave data analysis to the economist-he’s earned the right to give his advice to the people. Instilling fear about a crash only precipitates one.
Dont blame the Realtors either. The experienced Realtors meet with the experts and get future expectations of the economy from them. I don’t know a single Realtor that loved the boom last year in Phoenix, and that boom is hurting the market this year (the economists didnt expect a boom either) but since our prices went up 58% last year (an unreasonable amount) anyone would guess the market wouldnt and couldnt hold that increase which was strictly due to lack of supply and great demand.
Noone was blaming the Realtors last year when sellers recieved $50,000 more than their home was worth (people often were paying above appraisal price for homes here)but now that the market is returning to a natural market as it should, we are hearing complaints. The pendulum swung, hope you werent an investor getting in at the end. Heres to 2 years from now– when things will have completely returned to normal.
The Internet certainly has caused quite a stir in the real estate industry world wide. More and more opportunities are available for the real estate professional to market homes.
I think the Internet only slows down the industry because of how easy it is for agents to list properties. During 2006 many real estate agents nationwide experienced far below averages in interested buyers and sellers.
One of the biggest things the industry can expect is a restructuring of how the industry operates. Brokers for example have always wanted to make sure agents were independent contractors so that they avoid Government taxes, wages, benefits and so on. Now, it is so easy for a real estate agent to simply go out on there own thanks to the Internet that the Brokers are at risk of losing income due to not wanting to concern themselves with the burden of hiring an agent on an hourly basis.
Regardless what the Internet is doing to the industry, cities still continue to expand and grow with new homes being built every single day. for example has been a pretty hot market and continues to be a great place to do business in.
Very interessant your post
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Real Estate In Morocco
yeah, internet has definately revolutionized real estate industry. It’s not the same game anymore.
Good article, and I agree that the real estate slowdown will be amplified by the rash of oversaturation of real esate websites on the internet today. It’s definately going to keep a buyer’s market around for the next few years, at least.
I think the most interesting thing about this housing climate i the need for NAR to constantly reassure the consumer that the sky is not falling. you don’t have to invest millions in advertising to tell people it’s a good time to buy a home if it really is a good time to buy a home.
If the internet has done anything, it has allowed people to understand how local real estate really is. Realtors preach this, but until now, with the wild fluctuations in property values in so many areas, people didn’t believe it. It’s easy to go onto one of the national list sites and compare what’s happening market to market. Is it a good time to buy? It depends on where you live. Are there too many houses for sale today? Again, it depends on where you live. Not all areas in the US are over saturated. There are still some places with a shortage of housing and prices haven’t dropped. Again, real estate is local, local, local.
The internet has changed how quickly information gets to the general public. Even more importantly though is how the internet provides an opportunity for the public to understand the local real estate market from not just a newspaper writer but from a local Realtor. Blogs are wonderful tools to connect locally.
Welcome to the world of instant gratification. Reporting on yesterdays news is old hat. Blogs get the information to the consumer - pronto, which is how they now expect it.
It’s interesting to read this post from almost a year ago and see what the Internet has done to the real estate industry. In my opinion, it has empowered the consumer and it has educated many - it has also helped those RE professionals using web2.0 tools stand out from the rest.
The Internet is certainly helping consumers distinguish the B.S. and meaningless sales pitches from the truth about what’s going on in this ever-changing market.
I truly believe the media has had an enormous impact on the prolonged housing slump, more so than the internet. In my area and in many areas across the country, buyers are hearing how bad the real estate market is and how bad the foreclosure market is.
In many cases I have heard television news programs tell buyers to wait to purchase a home and if they do purchase, to make low offers.
The internet has definately allowed searchers to view information and of course do it much faster but I do not believe it has had the impact on the slumping real estate market that the media has. This is my humble opinion.
I think it is great that consumers have more info at their fingertips. Instead of just the headlines, they can read blogs from local agents who are experts and they can read the bubble bloggers too. (and no slowdown in my market if anyone is asking..)
The internet will most certainly help the real estate slow down. The internet and all the useful websites, widgets, plugins, etc. that are being created are great tools for buyers. These tools are providing buyers the means to make a good purchasing decision. No matter how bad a market is, there still exist great deals…the internet helps buyers find these deals which can only help speed up the market.
It’s interesting to read this post from over a year and a half ago and see the internet has not radically changed the real estate industry.
Consumers do have more knowledge available to them, which empowers them to make good decisions for themselves…….but I personally do not see a radical change.
Both the internet and the real estate slowdown bring challenges to the real estate industry that I believe will weed-out those agents not up to the challenge. A new crop of internet Realtors should emerge that aid consumers in the real estate industry by providing the most valuable aspect of the internet: information. A real estate professional should have the information and sharing it on the internet is how to keep up!
Radical change, unlikely, but many agents will be come much better as the old breed of agents dies out.
To Paula’s point, I do think it is interesting to see that things haven’t changed as much as we were anticipating, however, I personally foresee major changes happening in the future. I think that it is only a matter of time before the internet completely changes the way the real estate transactions are completed. It has already happened with the location of property, and the next step is the relationship with real estate agents, then the transaction itself. Redfin is phase one, and I believe that their model is only the beginning. It will be interesting to look back a few years from now and revisit this. Who knows maybe things will still basically be the same, but I wouldn’t bet on it.
I’ve survey our buyers online to find out what they want to see in order to provide them with useful tools. 80% of the people I surveyed don’t read real estate blogs….perhaps that will improve in the future.
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