This article was shared here with permission from Mike DelPrete for Inman Intel, a data and research arm of Inman offering deep insights and market intelligence on the business of residential real estate and proptech. Subscribe today.
As 2024 draws to a close, it’s worth revisiting the portal wars in the U.S. — and how little has changed.
Why it matters: It’s a case study that illustrates two important lessons: hype is not the same as reality, and some games just can’t be won.
- The potential disruptor is CoStar, which has invested over $1 billion in Homes.com to challenge the incumbent portals for dominance, with traffic growing alongside a massive advertising spend.
Yes, but: Corresponding revenue growth has slowed and pales in comparison to the established portals.
- In the latest quarter, Zillow’s real estate lead gen revenue was about 20 times higher than Homes.com’s.
Zillow’s lead over the No. 2 portal, Realtor.com, as measured by real estate lead gen revenue, has remained relatively constant over time — and if anything, has increased.
- The recent uptick could be a result of strength in a down market, Zillow flexing its Flex muscle, or just slower growth at Realtor.com.
- But the result is key: The No. 1 portal’s competitive position tends to get stronger over time.
The same scenario has played out in Australia and the U.K., where the leading portals command a significant revenue lead over their rivals.
- Interestingly, that lead is similar in all three markets — an average of 3.3x and increasing over time.
- The No. 1 portals stay strong and get stronger over time, the beneficiary of network effects, with no examples of that dominant position being eroded.
The bottom line: Real estate portal competition is like chess without checkmate; there’s no winning move, and it’s not a game that can be won.
- There’s a flurry of activity, tactical moves, and strategic plans, but very little actually changes; traffic may increase in a non-zero sum manner, but revenue — the ultimate metric of delivering value to paying customers — remains competitively static.
- Portal competition is exciting, but it’s unlikely to materially change the landscape — which is a perfect example of the DelPrete Probability Paradox in action.
Mike DelPrete is a strategic advisor and global expert in real estate tech, including Zavvie, an iBuyer offer aggregator. Connect with him on LinkedIn.
