This article was shared here with permission from Mike Delprete of Inman Intel, Inman’s data and research division, providing deep insight and market intelligence into the business of residential real estate and proptech. Subscribe now.
As 2024 draws to a close, it’s worth revisiting the portal wars in the United States. And little has changed.
Why it matters: This is a case study that illustrates two important lessons. That’s because hype doesn’t equal reality, and some matches are simply unwinnable.
A potential disruptor is CoStar, which has invested more than $1 billion in Homes.com to challenge the dominance of incumbent portals, increasing traffic along with huge advertising spend.
Yes, but the corresponding revenue growth has been slow and pales in comparison to established portals.
In its most recent quarter, Zillow’s real estate lead generation revenue was about 20 times that of Homes.com.
Zillow’s leads for the second-largest portal, Realtor.com, as measured by real estate lead generation revenue, have remained relatively constant and even increased over time.
The recent rally could be the result of strength in a down market, Zillow’s increased flex power, or Realtor.com’s slower growth. But results matter. The competitive position of the No. 1 portal tends to strengthen over time.
The same scenario is playing out in Australia and the UK, where leading portals maintain a significant revenue lead over their competitors.
Interestingly, that lead is similar in all three markets, averaging 3.3x, and increasing over time. The No. 1 portal benefits from network effects, remains strong, grows stronger over time, and its dominant position has never been eroded.
Conclusion: Real estate portal competition is like chess without checkmate. There’s no surefire way to win, and it’s not a winnable game.
There are many activities, tactical moves, and strategic plans being made, but very little actually changes. Traffic may grow in a non-zero-sum manner, but revenue (the ultimate metric for delivering value to paying customers) remains competitively static. Portal competition is exciting, but unlikely to change the situation significantly. This is a perfect example of DelPrete’s probability paradox in action.
Mike DelPrete is a strategic advisor and global expert in real estate technology, including Zavvie, an iBuyer offer aggregator. Connect with him on LinkedIn.
