Zillow Stocks Get Crushed As Google Tests New Real Estate Listing Search Format
Zillow shares have plummeted by over 9% on Monday over fears of what the future of online real estate might look like. Specifically, Google and its parent company Alphabet are running tests on adding real estate listings and sales into their search results.
Real estate tech strategist Mike DelPrete published screenshots that showed Google Search results with real estate listings powered by real estate data company HouseCanary. The listings allow users to view the full details on a property’s page, request a tour, and contact an agent. This model is very similar to how Zillow functions.
The Google real estate results, however, are just being tested and are only available in select markets and on mobile devices.
Investors and experts in the field are already projecting Google’s success with this new search algorithm, leading to the decline in Zillow stocks. During Monday’s session, the stock was down by at least 11%, according to reports from CNBC.
Analysts from Wall Street stated that Zillow, however, is not very exposed to organic searching like Google’s new tool seems to be trying to capitalize on, so this drop in stock could be temporary.
Alec Brondolo, a Wells Fargo analyst said that he would not “expect a meaningful financial impact from listings on Google shifting from organic to paid,” especially since Zillow is not overly dependent on organic search results for traffic.
“The listings product appears similar to Google Hotel Metasearch results; introduction could increase traffic cost to Zillow, but disintermediation unlikely,” CNBC reports Brondolo said in a Monday note to clients.
“In the hotel category, Google merchandises hotel rooms in search results as a metasearch ad product for OTAs. We would expect a similar approach in real estate, with Zillow, Homes.com, Realtor.com, etc. bidding for home listing ad units rather than Google attempting to monetize directly with an ad product sold to agents.”
Some analysts, however, can see the longer term implications of Google’s new search tool and how it could compete with Zillow and other popular online real estate portals.
Michael NG of Goldman Sachs wrote in a note to clients that he believes Google’s real estate listings show to be in an advertising format for buy-side agents, so it directly competes with Zillow’s Premier Agent program by “facilitating lead generation” for both agents and prospective buyers.
“While we don’t expect a direct near-term impact on Zillow’s business, given that most of Zillow’s traffic is direct (e.g., Zillow.com, StreetEasy.com, mobile apps) and Google’s new product is currently limited to select markets and mobile browsers, we view this development as a long-term risk for real estate portals like Zillow,” Ng wrote.
Oppenheimer’s Jason Helfstein stated that Google’s expansion into real estate will likely impact the number of Zillow’s consumers; which hit up to 228 million in the third quarter. This could cause their ability to monetize to decrease.
“The impact would likely take years to play out and would need to be rolled out across the US to meaningfully impact real estate portal traffic,” Helfstein said.
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at eric.mastrota@thenationaldigest.com.
