It’s True, Housing Demand is Down – We Have Proof!
Written by David Kertesz (contact - e-mail) -- October 12th, 2006 |
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Ok…So we’ve heard the news that the housing market is softening up, but by how much? Most industry reports detail price drops and sparsely attended open houses, but we haven’t seen an actual figure of how bad the situation has become. Since many of us at Compete own homes, we thought we would put our data to action.
Measuring Housing Demand Online:
Compete selected seven major housing/real estate sites to act as a proxy of the overall interest in the housing market. We selected these sites based on the following criteria:
- Offered limited or no rental properties
- Detailed estimated home pricing based on property taxes
- Attracted a minimum of 1MM visitors each month
There are hundreds of real estate sites, but for the purpose of our study we were comfortable narrowing the market to the sites highlighted below:
Housing Participation Down 13%
We measured visitor traffic to our proxy market and found a 13% decrease in participation over the past six months. The summer months tend to drive an increase in real estate activity, so this trend is even more alarming than we had anticipated; however, 13% doesn’t seem that bad…right?
Wrong! We found that the situation is worse. Measuring for interest in the real estate market doesn’t accurately account for “intention”. Many of us own homes and we pay attention to its value, but brief visits to real estate sites does not mean we are “in the market” for a new home. To more accurately measure real estate demand we took a second view measuring both the volume of visitors to sites and the volume of pageviews they made as an indication of actual intent. When adjusting for pageviews, real estate demand shows a 15% decrease from February 2006 to August 2006.
Where do we go from here?
A 15% fall in real estate demand is…not good. However, it’s not the end of the world. Albert Einstein said, “In the middle of difficulty, opportunity exists” and that’s the way Compete prefers to see it. Intelligent organization of clickstream allows Compete to see trends that people express through their online patterns. We look forward to sitting back, monitoring demand and then buying half of Boston when we see demand recovering. Check back in or send and email if you would like us to send you updates.
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October 12th, 2006 at 11:08 am
i just had my house appraise. the drop in demand and intent you identified corresponds perfectly with the decrease in my home’s value. rats!
October 12th, 2006 at 6:35 pm
This “post” is just another example of how bloggers make rash statements with little evidence. How are you measuring site traffic? Are you using Hitwise , ComScore, or Alexa data? What I do know is that your observation is based on virtually no empirical data.
October 12th, 2006 at 10:20 pm
Aaron,
Compete has developed a unique methodology created by experts in the fields of mathematics, statistics and the data sciences to aggregate, transform, enhance and normalize data in order to estimate U.S. internet traffic.
Based on anonymous daily web usage of more than 2 million people (largest domestic projection panel available), Compete calculates total traffic and rank for nearly every site on the web. We use rigorous statistics to make sure our estimates balance demographic and connection factors that match the entire U.S. Internet population.
Hope this answered your question.
Best,
The Compete Team
October 13th, 2006 at 3:02 am
Great post. We’ve seen interesting numbers in Australia too. But, on our site, realestate.com.au, the traffic has been rising not falling. In August we had 3.1 million unique browsers, and more than 334 million page views. Those are the highest numbers ever. Our residential site in New Zealand (185 thou in Aug) is also up. Our UK site hit 1.4 million uniques in Aug. Perhaps we can do a new chart with all the sites from the chart above, and adding in sites from Australia, NZ, UK, continental, Europe and Asia. It’d be fascinating to get a global picture of the real estate internet space.
October 13th, 2006 at 8:23 am
I live in The Palm Beaches of Florida, perhaps site traffic is down due to the site content. Most of the real estate sites are boring or look the same.
The links provided are dull and the daily News headlines of “Home Prices Falling”
feed into a wait and see attitude, why look today “tommorow homes will be cheaper”.
Should the Chinese start buying American Real Estate, the Headlines would read “China Purchases The Met” I’ll bet traffic picks up.
Anyway, I am A Realtor in Palm Beach and should anyone like to get away to our stress-free lifestyle in The Palm Beaches, and get into this market before the rebound Email me RMuchel@netscape.com
October 20th, 2006 at 12:33 am
The realtor makes the common”blame the media” this case, websites, argument. If they’re so boring, how did they ever get to be so popular in the first place? Never would’
ve happened without a bubble beginning to burst. This is the only bubble so far that has taken THIS LONG to start it’s downward spiral. Thus, I suggest two things I’ve seen: one, it’s long enough to get anybody on the fence or even close to the fence to move to the bullish camp. That is how a bear market draws in its prey. 2nd, it’s like a fish in water, does the fish KNOW its in water? Well even if a fish had a brain capable of understanding that, it doesn’t really know it’s in water ’til it’s caught OUT of water. Same with a bubble, it was SOOO hard to know that we were in a tech bubble as we were going through it. Now, with hindsight, we see it clearly. But the same happened in the 1987 stock market crash… and same thing happened in the 1989 stock market crash. I could go on for each crash that has occurred throughout the centuries.
Each of them, BTW, had a real estate component to their crash. That is, at some point whatever we’re bubbly about, whether it’s tulip bulbs to oil to technology, The bubble money eventually spreads to real estate.
Did you know that Florida had Million $ homes in the 1920’s before the crash? They even had some (well at least one, my memory is sketchy) Million $ homes around the Tulip bulb area of Holland in the 1600s. See real estate DOES NOT “always go up” as the saying goes. Depends on your time frame. Yes I agree there MAY be a rebound, markets never go straight up NOR do they go straight down, but the overall path is clearly down.
September 17th, 2007 at 8:35 pm
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