I was in New York earlier this week speaking at two Wall Street conferences (the JP Morgan Internet Conference and the Stifel Nicholas Consumer Conference) and then in Bellevue, Washington, last night speaking at the MIT Enterprise Forum. I told the Zillow story and explained the background of the company and that in the beta version we’re showing Zestimates for most homes in the country.
All three sessions were well attended, and the Q&A was lively. The questions from the audience were similar to the questions our customers have been asking us here on this blog, including things like:
- “How do you come up with the Zestimate?”
- "What if my data is wrong?" (Report it to us)
- "Is Zillow good or bad for real estate agents?"
Because these were Wall Street crowds (hedge funds, mutual fund managers, stock analysts and the like) they were also interested in what impact Zillow might have on other companies in the sector.
They also asked one question which I don’t think we’ve answered on the site: “What happens to Zillow in a slower real estate environment?” This is an interesting question, and frankly we debate it ourselves internally. The bull case is two-fold:
First, in a more stable price environment, rationality and research reign. And Zillow is all about enabling that research — providing home buyers and sellers with tools and information to buy and sell homes. Tools like Zillow are more likely to be used when price rationality is present. In other words, research is less important when buyers are just blindly bidding 20% more than asking price (which is kind of what the last few years have been like, especially in markets like San Francisco, San Diego or Las Vegas).
It’s kind of like when investors were bidding up internet stocks like mad in the late 90s – they weren’t seeking out tools to help value stocks, they were just throwing money at things. So if/when things slow down, Zillow will be more useful then ever.
Second, real estate professionals will need to market their services more than ever if/when the market slows down, which means there will be even more interest in partnering with us (via advertisements or in other ways) in order to reach you, our visitors.
The bear case says that when markets are slower, people tend to be less interested in the value of their house. This is undoubtedly true – how often did you check your stock portfolio from 1997-2000? If you’re like me or my grandmother, probably a couple times a day. From 2000-2003? Hardly ever. Suddenly my grandmother stopped watching CNBC. Despite the reduced “general interest” in home valuations that would occur if/when markets slow down, we still think that Zillow will be a critical tool for buyers or sellers. So maybe we’ll get fewer people fantasizing but we’ll get as many real buyers and sellers as ever.