Obviously there are many more online resources available to buyers, sellers, homeowners and agents now than at any time in history. These tools have proliferated rapidly -- it's hard to believe, but only a few years ago homeowners couldn't get home valuations; sellers had to rely solely on the MLS to market their listing; agents had to rely almost exclusively on newspaper classifieds; heck, buyers couldn't even find the address for most listings, no less other info about the home. A lot of these tools have become so ubiquitous so quickly that it's hard to imagine a time before they existed.

In that vein, here are two interesting thought experiments. 

1. Imagine if we were in the current crappy housing climate today but the online real estate category was still stuck in a 2004 world: no blogs, no Zillow, no Trulia, no ActiveRain, barely any brokerage websites, very few agent websites, a nascent Craigslist, no googlebase, etc etc. The question is: will all of the online resources available to buyers, sellers, owners and agents help us come out of this housing downturn more quickly than we otherwise would have?

2. Rewind the clock to 2004 -- the early days of the housing boom which we're now nostalgic for. Imagine if back then we somehow had 2008's level of internet tools: what if 2004 somehow had 2008's level of online real estate tools. Would the housing appreciation and subsequent bubble bursting have played out differently?

 

I'm very curious to hear your answers. Here are mine:

1. Unfortunately, no, I don't think that all of the great online resources now available to us will pull us out of the downturn more quickly. We're in this mess because of the sudden and dramatic pullback in the accessibility of capital to buyers. Six months ago buyers could get easy credit; today they can't. Unfortunately, real estate tools don't really help that fact. HOWEVER, I firmly believe that buyers, sellers, owners and agents are able to make SMARTER real estate decisions during the downturn as a result of the tools now available to them. So the market might not improve any more quickly, but savvy participants can use online tools to help them weather the downturn.

2. Yes, I think that if today's level of online tools existed a few years ago we wouldn't be in the mess that we're in. For starters, if Zillow had existed and been as well known back during the 2002-2007 run-up, there would have been greater media attention to the fact that house prices were appreciating at an unsustainable level. This would likely have called attention to the loose lending standards that made this unsustainable appreciation possible, which would have helped us achieve a "soft landing" instead of the deep downturn that we're now suffering through.

What do you think?     

 

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9 Comments on The internet's impact on the housing downturn

APR
21
2008
373,682 Points Outside Blog
Likely you are right. Things may have been different if there were different tools back in the 2002-2005 era. Or would people have just gone on and not paid any attention. Perhaps. Hard to say really.
11:20pm • #1
399,721 Points 23 Featured Posts Localism Sponsor Outside Blog
I agree as well....human nature remains the same, with all the tools and devices, and access to information.........the decision making process hasn't changed all that much, me thinks.......:-)
11:23pm • #2
185,738 Points 15 Featured Posts Localism Sponsor Outside Blog

Market speculation doesn't go away.  The media was warning about the rapid appreciation for over a year before the bubble burst.  Further, the bubble burst WELL BEFORE the credit crisis.  The credit crisis only deepened the problem - and the credit problem was, in many ways, caused by the bursting of the bubble because speculators and people "reaching" for their dream home found themselves upside down on their value and underwater financially.  When their ARMS adjusted, they couldn't refinance.  But the credit problem didn't create the housing downturn.

I would HARDLY point to an industry parasite like Zillow for providing "answers."  If my CMA's were even an tenth as inaccurate as 90% of your so-called zestimates, I wouldn't be able to sell a thing.   The forum on your website is poorly monitored and badly run and feeds into the Anti-Realtor sentiment in order to snag readership. Your zestimates use comps from differing municipalities with no thought to local considerations. All you do is prove that you are useless - while you claim to "empower the consumer." If you didn't cause so many headaches for me and other hard-working agents your comments would be funny. 

11:30pm • #3
432,448 Points 27 Featured Posts Outside Blog

I do .not think we can play it this way. It just does not work this way. It is like asking whether there would be a different outcome of the Napoleon's war shold he have modern time cannons.

And if it seems like the answer is yes, it is not. THe answer is "No". Modern Cannons would require modern logistics,  infrastructure, the technology, etc.

 
11:31pm • #4
3 Featured Posts Localism Sponsor
I think it's lock online stock tools.  Sure, anybody can do it.  But SHOULD they?
11:54pm • #5
APR
22
2008
 true, true
10:54am • #6
149,655 Points

Hi Spencer: I think the word is cyclical. Just as we all experienced good times up until 2006, now we are going through a trough. Expect the market to recover either later on this year or the start of next. The internet has made for a more educated buyer but they still yearn for a full-service outfit. Have a great day!

 

Paul
1:51pm • #7
294,728 Points 2 Featured Posts Outside Blog
Competition for financing would have been magnified with the advent of today's cyber resources. The downside would have been an expeditious depletion of capitalization. The coming market's arrival is definitely not something that's been awaited, nor anticipated, and it is especially not momentous, albeit recoverable, and I believe it will take seven years to correct. The well-worn catch phrase is that real estate is a local business driven by local people. If appraisals are being performed via the internet in your market with Trulia, Zillow or Schmillow, then market values in your area are slanted by opinions not based on local MLS data. Your buyers and sellers don't get the local picture. The mess would be worse, in my opinion, than it is already.
2:40pm • #8
AUG
20

We believe that the internet accelerates the exchange of information.  Can it make loans more readily available, no.  But we believe the real factor that is damping demand has been the perception that values are not stable. Once the perception is that values are rising again people will find ways to finance homes. They did in the late 70's with conventional interest rates running near 20%.  Because home prices were rising people like me were buying homes with creative financing often carried by sellers.  

Once the general perception is that home prices are rising people will move mountains to buy.  The internet may not make that happen sooner but as soon as it does happen the internet will help the new spread the work more quickly. In that small way the internet may help lead us out of this correction more quickly.  

http://whiteinkstudio.com 
12:07am • #9

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Spencer Rascoff

Seattle, WA

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