After two full years of depressed home sales, the internal advertising pendulums have begun to swing for real estate. Agents, who initially tried to appease home sellers by advertising more on traditional channels, this year systematically cut their print budgets and pushed more money into the Web.
The result has been a slingshot effect for online advertising. While total ad spending on real estate has declined 3 percent this year, spending on the online segment has grown 25.8 percent, hitting $2.6 billion. We are projecting online real estate advertising to grow at a somewhat slower rate next year - 12.4 percent, while total real estate advertising continues to compress. In three years, agents and brokers will be spending more ad dollars with online media than with the newspaper.
The outlook is bleak for those in the business of making money off classified listings. A combination of economic uncertainty, falling prices and rising mortgage interest rates makes it probable that the volume of listings will decline, but also probable that the pot of money to be spent on advertising will likewise decline.
Two million adjustable-rate mortgages are due to be re-priced over the next 24 months and as many as 25 percent of these might go into default as a result. This is consistent with a report published in October by the Census Bureau showing that homeownership fell for the fourth consecutive quarter. From a peak of 69.3 percent of households in 2004, now only 68.1 percent of households own their own home. Economists believe lower home-ownership rates herald declines in new-home sales, which in turn will continue to drag on future construction.
Our data supports these assumptions. After average annual increases of approximately nine percent in total real estate advertising between 2001 and 2005, the market essentially flat-lined in 2006 and is forecast to fall by 3.3 percent this year. This trend will continue for at least the next two years. For newspapers, the situation is worse. We project that coming off last year's high of almost $5.2 billion in print advertising, there will be a 6.8 percent decline this year, almost the same again in 2008, followed by a stunning 16 percent fall in 2009 and 13 percent in 2010. By then, real estate marketers will be spending more on online media than on newspapers or local homes magazines.
In 2008 the biggest blip on the radar could be a converging triumvirate of Yahoo, Zillow.com and a consortium of 11 newspaper companies. The consortium has created an advertising alliance with Yahoo - whose real estate offering has gone from being the eighth most-trafficked real estate Web site to the second mosttrafficked site) in the past year - and with Zillow.com which holds the No. 5 spot.
Mark's comments March 2010
looking back is always 20/20 but the web has become more important for real estate than anyone could have imagined just a few years back. That's why I spend so much time on my site and blog, it's what you want, information to help you make the most important decision you will ever make!
Thank you for reading my blog and if there is anything else I can help you with please don't hesitate to contact me,
A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate
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