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For years, the real estate portal game was chugging along with Zillow safely in first place.
Then Andy Florance showed up.
“Blackmail is too strong a word for it,” Florance, the CEO of commercial real estate giant CoStar, said of Zillow in 2021, before he coined his own term: “Zillow-mail.”
Just days later, while on the Inman Connect Las Vegas stage, Florance fired another salvo, suggesting that Zillow hijacks listings. Florance’s plan was to challenge Zillow in the residential portal market.
The comments ultimately launched the latest round of portal wars: a competition among real estate websites to be the dominant consumer- and agent-facing option.
In that context, Intel wanted to know how traffic to the big four portals — Zillow, Redfin, Realtor.com and, now, CoStar’s Homes.com — stacks up, and who at this point is winning. For the purposes of brevity, we’re focusing on the last five quarters. That’s a period that coincides with some of the biggest portal war headlines, such as CoStar’s entrance in earnest into the space and the prospect (ultimately abandoned) of major acquisitions. The last five quarters also capture the period in which the market shifted from the pandemic-era highs to the more recent rate-driven lows.
The simple takeaway from Intel’s analysis is that Zillow is far and away the largest portal right now. When it comes to traffic, no one else is even close. But the more complicated picture is one that includes multiple massive companies, at least one of which dwarfs Zillow. And it’s one in which the quality of a company’s traffic may matter just as much as the quantity.
It’s a situation that one analyst compared to the TV show Game of Thrones, about cunning warring families, and in which the end is not yet written.
Traffic is down across the board, but not equally so
Last week, David Doctorow — CEO of Realtor.com’s parent company Move Inc. — noted that “traffic levels are certainly down across the industry.” And he said such a decline is expected because listings are down.
Doctorow is right: Recent earnings reports show that the major portals web and app traffic in the first quarter of this year was down from high points last year. Zillow, for example, averaged 212 million unique monthly visitors between January and March. That’s down from 236 million in the third quarter of last year.
Similarly, Redfin averaged 50 million visitors to its sites and apps in the first quarter of 2023. That’s down from 53 million in 2022’s second quarter.
The graph below shows how the four different companies ultimately stack up over the last five quarters.
Notably, however, Zillow is also not down year over year. In fact, in Q1 2023, the portal actually averaged 1 million more unique monthly visitors than it did in the first quarter of 2022.
Redfin also was only down about 1 million unique visitors in the first quarter of this year compared to the first quarter of last year. So if we’re comparing directly equivalent time periods, both companies are generally holding steady.
Realtor.com, on the other hand, has seen bigger traffic losses. In the first quarter of this year, the company averaged about 72 million monthly users. But that’s down from 95 million during the same period in 2022. In fact, Realtor.com has seen double digit percentage drops in traffic during each of the last four quarters.
Homes.com is represented above in green. The portal is notable for being the headlining residential brand for CoStar. However, Costar acquired Homes.com in 2021 and only started breaking out the site’s traffic as an individual metric in the last two earnings reports, which is why the green bar only appears at the end of the graph.
In any case, the graph below shows year over year percent change in traffic for the three older portals.
This graph more clearly shows that Zillow, though down this year compared to parts of 2022, has more or less seen it’s traffic stay flat over the last five quarters, while Realtor.com has seen the biggest declines.
Zillow isn’t just winning, it’s extending its lead
Even most casual observers are probably aware that Zillow is a behemoth with a major lead over other portals.
But the charts above hint at something more: Zillow isn’t just the biggest player, but as other portals see bigger declines Zillow actually extends its lead. To give a sense of scale, the graph below shows Zillow’s total site and app visits (as opposed to average monthly unique visitors) for each of the last quarter. In the most recent quarter, the company saw a total of 2.5 billion visits.
The other companies featured in this story don’t publish total quarterly visit numbers in their earnings reports — though presumably Zillow maintains a significant lead there as well.
But either way, the notable thing about Zillow’s total quarterly visit numbers is that they too are holding relatively steady.
The wildcard here is of course CoStar’s Homes.com, which right now is both new and small but growing quickly. Indeed, data the company provided to Intel indicates that in April average unique monthly visitors hit 30 million, which is a year-over-year increase of 290 percent. Since CoStar acquired Homes.com about two years ago, unique monthly visitors are up 386 percent, the company also said.
These numbers cover different time periods than the data from other companies’ earnings reports. And course a company building a brand from relative obscurity is likely to score the biggest gains in the beginning of that process.
But Homes.com’s traffic gains are still huge and meaningful, and indicate that the site is eating more of the proverbial portal pie these days.
It’s also worth noting the relative size of these companies. The graph below shows their respective market caps as of Monday.
What’s obvious from this graph is that CoStar, with a market cap of $32.6 billion, is vastly larger than the other companies in this story. That’s mostly because the company is a giant in the commercial space. But it’s worth keeping in mind that with such a large size, CoStar potentially has a massive number of resources it can bring to bear in the portal wars.
By comparison, Zillow’s market cap was $10.58 billion Monday.
Then there’s Realtor.com, which is a subsidiary of News Corp. Of course, News Corp owns a wide array of businesses including high-profile brands such as the Wall Street Journal. But News Corp’s market cap, at $10.65 billion as of Monday, was almost the same as Zillows’. Which is to say, if News Corp wanted to make a play for the portal crown, it has the size to presumably be a contender.
How the portals envision the competition playing out
In a conversation with Intel this week, Florance acknowledged that Zillow has “dramatically more traffic” than Homes.com, and that CoStar respects Zillow’s position. But he also was optimistic about his own company’s ability to grow.
“We’re offering something completely different,” Florance said. “The site is cleaner, faster, the [user experience] is approachable, it’s not junked up with stuff. And most importantly, reaching out to ask a question about a property is not an awful experience.”
Florance also pointed to Homes.com soaring year over year traffic. And he noted that if the site’s numbers are combined with Apartments.com — CoStar’s portal for rentals — the company now has more residential traffic than any other portal except for Zillow. Florance additionally said CoStar has “about 1,000 people working on Homes.com right now,” all of whom are “cranking out” new features.
“There’s a lot of traffic to take share from, and we’ve just been successful in taking a bit of share from those folks,” Florance ultimately said of the other portals.
Those other portals, however, aren’t looking to concede just yet.
In an email to Intel, a spokesperson for Realtor.com pointed out that the site “remains the second most visited real estate site in the U.S., as measured by Comscore.”
“We’re playing the long game at Realtor.com, delivering the best and most engaging online experience for our consumers and the highest-quality solutions for our agent and broker customers to help them succeed,” the spokesperson added.
The company also indicated that it sees its visitors as uniquely valuable.
“The nature of our traffic is equally important; our own research on the attitudes and usage of consumers visiting real estate platforms tells us our site visitors are more likely to be in a ready-to-transact mode, whether it’s buying, selling or renting,” the spokesperson added.
When Intel asked Redfin about traffic, the company pointed to its recent earnings call, during which CEO Glenn Kelman said that “demand for the agents on our site has strengthened as we’ve drawn online visitors away from our rivals and more recently increased the rate at which those visitors ask an agent for service.”
“Another reason for optimism about share is traffic to Redfin.com,” Kelman also said on the call, “which is taking visitors from online rivals and now converting more of those visitors into customers who meet our agents.”
Zillow — perhaps exhibiting king-of-the-hill joie de vivre — did not provide an on-the-record statement, but pointed Intel to a recent shareholder letter than notes among other things that the company has large amounts of direct traffic and is relatively less reliant on SEO than other companies.
The portal world’s Game of Thrones
To understand how much any of this matters, Intel reached out to John Campbell, an analyst with Stephens who covers the real estate industry. Campbell noted Homes.com rapid growth after “coming out of nowhere,” pointed out that Zillow and Redfin seem to be holding relatively steady, and then observed that Realtor.com’s traffic declines are “clearly a bad look.”
“So now you’ve got this whole Game of Thrones portal war,” Campbell said, referring to the hit HBO fantasy series.
In Campbell’s view, traffic matters because “you can’t have a dinner party and forget to invite the guests.” And in that context, he suggested Realtor.com was in the most precarious position because it’s losing users while also being “not really in the narrative” about portals right now.
Meanwhile, Campbell said Zillow’s huge traffic numbers far eclipse the actual number of home transactions in a year — experts expect the U.S. to see between 4 million and 5 million sales this year — meaning at a certain point more traffic isn’t the be-all-end-all metric.
“If they had 220 million unique visits verses 500 million what does that matter? ” Campbell wondered. “It’s not like there’s that many more sales.”
His overarching point was that traffic matters, but that at the end of the day “to be able to compete with Zillow you don’t need the same level of traffic.”
“You just need higher intensity traffic,” Campbell said. “They’re not going to beat Zillow by being Zillow.”
The comments are most relevant for CoStar, which Campbell thinks over time is likely to continue evolving and gaining users — though he added that “getting to 220 plus million unique visitors, that’s going to be tough.”
Russ Cofano — an industry veteran serving as CEO of real estate marketing firm Collabra Technology — made a similar point, telling Intel that “traffic absolutely matters” because all the portals are selling something. However at a certain point, he added, the portals need quality traffic that turns into “the kind of impressions and users and clicks that feed what your advertisers want.”
In other words, the quantity of a portal’s traffic isn’t the only thing that matters. Quality matters as well. And in that way there’s an opening for companies other than Zillow to make headway, even if they can’t entirely claim the portal world’s digital throne.
“I don’t think anybody is going to challenge Zillow, they’re too entrenched and they have too strong for a brand with consumers,” Confano concluded. “I think that game has been won for the foreseeable future. But that doesn’t mean other companies can’t pick at their market share.”