Searching for a Real Estate Recovery

Consumers aren't doing much home buying or selling. So why are they constantly looking at real estate online? According to media reports, 2010 was nothing but doom and gloom when it came to the real estate outlook. Sure, interest rates are at or near record lows, but the expiration of the homebuyer tax credit in April 2010 signified the end of hope for many sellers longing for a housing market hero. In a ripple effect, home prices fluctuated and sales stalled back to stagnant. One might assume that in these down real estate times, consumers would just turn away from the industry altogether. While they may not be whipping out a check to cover that now commonly required hefty down payment, or making offers, online real estate search activity in 2010 has remained consistent, according to Realtor.com, the number-one homes-for-sale website operated by Move (

). The 2010 Realtor.com study also revealed that consumers' geographic interests remain stable too, with familiar favorites like California, Nevada, Florida, Texas, and Arizona topping the search activity list yet again.

In December 2010, the popular real estate website Zillow.com broke its own traffic records, hosting more than 13 million unique users in the traditionally slow real estate month. The site's stats also show that consumers look at homes a whopping 20,000 times per hour on Zillow Mobile. “Online search is a critical measure of interest in real estate, especially now that more than 90% of buyers search for their homes online, " said Realtor.com President Errol Samuelson. “Changing conditions throughout 2010 in the sunshine states resulting from foreclosures, the tax credit, interest rates, and other factors created more interest in real estate compared to other states." So is all the online real estate activity driven by simple curiosity, or could it indicate the coming of a long-awaited turning of the tides for the real estate market? In many ways, it depends who you ask. The experts certainly don't expect the housing market to pick up any time soon. The December 2010 MacroMarkets Home Price Expectations Survey, based on the opinions of its strategists, economists, and real estate experts, predicted an even longer road to real estate market recovery than previously thought.

The Third Quarter 2010 Fannie Mae National Housing Survey released by Fannie Mae revealed equally bleak sentiment in the minds of consumers. That study showed that “Americans are less certain that the housing market has bottomed, and continue to be wary of buying a home.” Further, just 66% of Americans polled reported that they felt “buying a house is a safe investment,” indicating a potential paradigm shift in the way Americans have traditionally viewed renting and homeownership. But scientific studies on the real meaning behind online search activity tell a different tale. The Proceedings of the National Academy of Sciences of the United States of America (PNAS) recently published a study titles Predicting Consumer Behavior With Web Search. Conducted by researchers from Yahoo's Microeconomics and Social Systems group, the goal of the study was to reveal just how far in advance consumer search activity could accurately predict future occurrences, and whether “ search activity is a systematic leading indicator of consumer activity.” The study looked at search activity related to events like movie premieres and book releases to understand the predictive accuracy of search activity leading up to an event, compared to the actual performance upon release. It concluded that “predictive power of search persists as far out as several weeks in advance -- for example, four weeks prior to a movie's release search volume remains highly correlated with opening weekend revenue.” The research team also stated that their findings extended past low-involvement, small-ticket purchases, stating that the same conclusion could be applied “to a wide range of consumer behaviors and economic indicators.”

Jennifer De Vivo, a seasoned realtor with the De Vivo Team of Charles Rutenburg Realty in Orlando, Florida, has long been tracking the cause and effect of online real estate search activity in her market. De Vivo's analysis found that customers will search for up to two years before ever making a move in the market. Likewise, those who search the most, are often the least qualified to buy. In her opinion, the current real estate market can be summed up in one word: hesitation. There's also the chance that all this speculation on a real estate recovery has created its own self-fulfilling prophecy of sorts. Ryan Hinricher, founder and senior housing analyst at Investor Nation, opined that “the housing crisis has put the real estate market in the media on a daily, hourly, and every minute basis. Even if [homeowners] are underwater on their home (and more than 22% of all Americans are, according to the December CoreLogic Negative Equity Report), people want to know how much, and when the market is coming back. What better way to do this than search homes for sale?”