It seems that everyone is talking about the fact that online real estate sites are increasing in traffic despite the overall drop in demand. The story’s been getting a lot of press recently, and El Pais, a leading Spanish newspaper, is the latest to jump on the bandwagon, noting that in 2007, Spanish real estate sites doubled their traffic even as demand dropped dramatically.

The relevant data includes:

• 50% of all home seekers begin their searches online
• The total number of Internet users that search on online real estate sites to find apartments has more than doubled, from 1,6 million in 2006 to 3,5 million in 2007
• The increase in users can mainly be explained by the rapid growth of Internet usage in general
• Fernando Encinar, Idealista’s communication director, points to Germany’s ImmobilienScout as an example of the fact that a stagnant market combined with strong growth in Internet usage can still create a highly profitable online real estate business (I’m trying to compile more detailed info to analyze this last assertion in more detail, but the facts speak for themselves — Germany has had a relatively flat real estate market, but ImmobilienScout just got bought at a valuation of €545 million).
• Fernando also notes that properties in Madrid now stay on the market 10% longer (on average, apartments stayed on the market for 189 days this year vs. 172 days last year), while in Barcelona apartments stayed on the market for 35,5% more time (183 days this year vs. 135 days last year).
• 1/3 of the apartments listed on Idealista have decreased in price, and prices have fallen over the last 3 months by 0,5% in Barcelona and 0,9% in Madrid.
• After years of more aggressive increases in the price for listing on their sites, some real estate portals have waived price increases to retain existing clients with lesser budgets.
• The article suggests that the four main challenges for the existing real estate portals are:
  • Finding ways to improve their search filters
  • Offering more and better features
  • Playing a more active role in the sale and purchase process, apart from just providing listings and similarly general information. Alternatively, offering the real estate agents a better return on their investments will be essential in deciding which websites survive and which sites fail.
  • Getting to know the Internet user better, offering more personalized service and the option to participate in helping to generate content/count on the user’s feedback.

I couldn’t agree more. The ideas are clear. Now it’s time to see who executes best.