Big changes are happening in our industry; especially online. The founding member of RedFin stepped down in August, and HouseValues stock price has taken a nose dive. Zillow, after a great fanfare is now facing lawsuits. Now I luckily I never invested in House Values.com, and am not surprised to hear that their lead-generation approach was not fully sustainable. However, what do these changes mean to our industry?
If you look at the behavior of industry and supporting technology in a boom/bust market (now I am not saying our industry has gone bust, this is merely a recap of historical performance) the industry grows first from rational support. After a time, rational, but risk adverse, investors invest in the industry. Finally the growth of the industry accelerates until irrational investors choose to jump into the market. This goes on until fundamentals cannot support the growth and a correction occurs. This is what happened with railroads, and more recently with tech-stocks.
The interesting observation however is that after each correction there exists a long steady growth period where the industry steadily grows to well beyond its initial size at growth rates that the fundamentals can support. Once again, a great example is the presence of the internet now versus seven years ago…. Don’t forget that Google just paid 1.6 billion for YouTube.
So what does this mean for the real estate industry and the competing online real estate services? I suspect that online companies will continue to find ways to streamline the transaction and will help real estate agents differentiate themselves from the competition. However, instead of rapid-growing web companies, I see a lot more REALTOR-centric technologies that help the real estate agent guide and advise the client through the transaction.
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Friday, November 10, 2006
Posted by 4MySales at 11:32 PM