From the lovely and talented Sara Bonert (@sbonert) over at Zillow blog, I learn that Zillow gets 55% of all California buyers:
Over half (55%) of those who reported using the Internet as a tool in the home buying process used Zillow. Realtor.com continued to be the most used site as 89% of buyers used it; with individual real estate company sites at 81%; individual real estate sites were used 66% of the time. Yahoo! Real Estate scored with 53% and Craigslist was at 49%.
I wonder (aloud) on the comments and on Twitter whether this is a good thing for Zillow, seeing as how they’re coming in fourth out of six options, behind Realtor.com (89%), individual brokerage sites (81%), and individual agent sites (66%).
The dashing and charismatic David Gibbons (@davidgibbons) responds:
@robhahn dude, you are not serious … try answer this … if you own a broker site do you get 81% of buyers? [hint: no, but Z does get 55%]
David does have a point. But I fear 140 characters can’t do justice to my point. So here goes. CAVEAT: MASSIVE UNSUPPORTED SPECULATION FOLLOWS BELOW THE FOLD.
Analyzing the Numbers
Since I don’t have a copy of the 2009 CAR Survey of Buyers (that’s California Association of REALTORS, not the auto industry that is headed towards nationalization an bankruptcy) handy, I have to make a lot of guesses and assumptions and all kinds of other stuff that will make this whole enterprise fall apart. But…
According to Zillow’s own stats, Zillow gets 8.9m monthly uniques — this is a national number. And according to this article, Realtor.com did 11.3m monthly uniques in April of 2009. Let’s suppose that the CAR survey percentages apply to this national number.
55% of X = 8.9m (Zillow) and 89% of X = 11.3m (Realtor.com).
The range of X is between 16.1m (based on Zillow) and 12.7m (based on Realtor.com) buyers nationwide every month. Let’s split the difference, average the two and say the number is around 14.4m buyers nationwide.
Now, California as a state contains 11.95% of the total population of the United States. If we go by this, then 11.95% of 14.4m buyers, or 1.7m buyers, should be from California. With a total population of 36.7m, that means roughly 4.7% of Californians are in the market for a new home every month. Note that this is a HUGE assumption, and likely to be wildly inaccurate as to the count of homebuyers in the U.S. or in California. But it’s what I got to work with for now.
Let’s keep going. There are a total of 3.6m listings on Zillow, as of July 1, 2009 according to this press release. When I go to Zillow and do a search for all listings in CA, I get 255,893. That amounts to 7.11% of the total listings count in Zillow. Note the gap between % of population and % of listings; this may be an indication of the depressed California real estate market. If we try to estimate the count of buyers in California under the logic of estimating real estate activity, then we’re looking at 7.11% of the 14.4m national buyer number, or 1.02m buyers of California real estate. Again, a huge assumption.
Maybe the realistic number lies in between, so we’ll average the two and get to 1.38m or roughly 3.7% of the total population of California. This represents the total California Buyers.
Going back to the CAR survey, Zillow gets 55% of this 1.38m monthly California buyer pool, or about 750K uniques from California. Remember that there are 255K listings on Zillow for California right now. That gives us just under 3 uniques on Zillow per listing.
With me so far? What does any of this matter?
Okay, now then… there are 448 listings in Costa Mesa, CA on Zillow.com as of right now. If the above ratio holds, then there are 1,344 uniques who are searching Costa Mesa on Zillow. And the total number of California buyers looking for homes in Cosa Mesa is 1,344/55% = 2,443 (since Zillow has 55% of the total buyers).
Here comes the factual question for any broker or agent in the Costa Mesa market: how many monthly uniques do you get to your website?
If your brokerage website in Costa Mesa, CA gets more than 1,344 uniques a month, you’re outperforming Zillow. That is, unless, a big chunk of your traffic is referred to you by Zillow itself.
I couldn’t put this into a 140-character Tweet, but the question at issue is whether the 55% of total California buyers that Zillow gets is really meaningful. David Gibbons argues that it is, because the 81% of survey respondents who used a brokerage website are spread out amongst hundreds, maybe thousands, of individual broker sites. But that logic assumes that all 750K unique visitors to Zillow who are searching for homes in California are searching in the relevant area. This is, I think, flawed.
The 81% number for individual broker websites is an aggregated number, but so is the 55% number that Zillow is so happy with. Just because the traffic is on one site does not make it meaningful to a broker or a realtor who is interested only “live buyers” interested in his market area. If 90% of Zillow’s California buyers came from and searched for San Francisco real estate, I rather doubt that the Costa Mesa realtors/brokers would care very much.
So if you’re going to do comparisons to see which site is more effective for marketing, then you do need to get down into the weeds a bit and compare for the relevant area.
In the analysis above, the numbers may be bad — after all, I was trying to estimate (in a hurry) the total count of California buyers as a whole, then California buyers in a given market area like Costa Mesa — but the logic, I think, is sound. Maybe the true ‘threshold number’ above which a local brokerage site is outperforming Zillow isn’t 1,344 but 4,344 or 644, but there is such a ‘threshold number’.
And when the CAR survey shows that 81% of all California buyers used an individual brokerage website during their search, the fact that the 81% is an aggregated number does not therefore render it useless in a comparative perspective from Zillow with its 55% number. The two are, in fact, apples to apples.
The only thing that would change the logic is referrals from Zillow to all these individual websites. If Zillow showed data that 50% of their web traffic goes to an individual website, that changes the equation completely. If the reason why brokerage and agent sites are at 81% and 66% respectively is because of Zillow, then that’s a different story.
Quod Erat Demonstratum
None of this takes anything away from Zillow’s accomplishments, in my mind. They’ve done a great job of building traffic, building userbase, building value, etc. That they’re up to a lot of truly innovative stuff — like the mortgage marketplace, the focus on statistics and data, etc. — is not to be questioned seriously. Zillow has become a very important company in our little industry.
But my initial point was simply that I would not be out there pounding my chest if I came in fourth out of six, with individual brokerage sites and individual agent sites beating me by 26% and 11% respectively. If anything, that would make me gird my loins up for even more work.
David’s logic, I think, could make Zillow ignore two of its most serious competitors simply because the competition is spread out amongst so many sites. On the current numbers, that would be dangerous.
As always, I welcome feedback and especially criticism showing me where I’ve gone astray. I’d especially like to see some real web traffic data from brokers in California, including what % of their traffic was referred to them by Zillow.