Zillow Rides the Bad Tides of Real Estate

(The View From the 46th Floor)

The bad market for real estate has put a crimp in a lot of real estate marketing (except perhaps for foreclosure sites like Zetabids). The New York Times, on Sunday, found that many real estate sites were flat at best, with some laying off staff. In The Times’ article, Curbed founder Lockhart Steele referenced “the 401K effect,” with people losing interest as the value of their holdings declined.

But Zillow, a prime mover of the real estate Web site revolution when it launched its Zestimates of housing values in 2006, says it is riding the tide. Traffic-wise, Zillow reports that it is seeing record usage.

In December, internal reports and Omniture showed it had 5.8 million unique users, with many of them only using Zillow. For January, which typically gets much higher real estate traffic than December, the company is expecting to report 7 million uniques.

The boost in Zillow’s traffic would seem counter-intuitive, especially given the “401K” effect cited above (which I believe in). But during a visit to the company’s very corporate headquarters on the 46th floor of the Wells Fargo building in Seattle’s financial district (they got “a great deal” from the landlord), COO Spencer Rascoff said the site is benefitting from several factors.

These include improved search engine optimization, a rich database of listings on account of numerous brokerage deals (“We’re getting feeds from every major brokerage”), and the launch of the Zillow Advice product. The company’s mortgage marketplace also has a role.

“There is more interest in the category at every stage of real estate,” said Rascoff. Closer ties with the brokerages play an especially strong role.

One program still getting under way is the relationship with the Zillow Newspaper Consortium, which is providing Zillow with additional sales from hundreds of newspapers, while distributing its features. Zillow will also eventually receive newspaper real estate content, especially Open Houses.

The consortium service recently launched in major market dailies, including the San Francisco Chronicle, The Houston Chronicle and The Philadelphia Inquirer. Rascoff said it enters Phase 2 in “a couple of months.” But while Zillow will continue to develop the relationship, he candidly said it isn’t expected to play an especially big role for the company. “We’re a big media company as it is,” he said.