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Real Estate Outlook 2010
Borrell Associates Inc., Jan 2010, Pages: 49
Has the mighty real estate advertising category peaked out for online media? This '2010 Real Estate Outlook' describes major trends in spending by agents, brokers, apartment owners and mortgage lenders and issues the publisher's forecast for this year. This ad category declined 20% last year, from $24.4 billion to $19.6 billion. We're forecasting a mild bounce back in 2010 at 3% growth. The publisher's annual assessment of this important category describes the situation and offers 20 charts and graphs detailing how real estate ad dollars are shifting. It also includes appendices offering detailed data on U.S. ad spending in this category, as well as a market-by-market estimates of national and local spending for 210 cities
It is no secret that the U.S. real estate market has been stuck in a ditch. However, what caught most everyone by surprise was the depth of that ditch. There is plenty of bad news to go around in every sector of the market – residential, commercial and financial as well as advertising – with more on the way. While many trends are decidedly negative, there are pockets of upward movement in real estate advertising that media companies can exploit in the short run, and major trends that they can harness for the long haul. This report quantities those trends, identifies the bright spots, and describes the underlying forces that will shape real estate advertising in the next decade.
With almost a quarter of homeowners owing more than their house is worth, one in seven mortgages delinquent or in foreclosure, and unemployment likely to remain at 10 percent or higher, it will take another three to five years to work through problems on the residential side of the market. On the commercial side, things are no better. Once vacancy rates are increasing by 11 percent while rents are declining 12 percent, there is a huge overhang of vacant industrial space, and fewer than 10 percent of troubled commercial loans are being resolved. Commercial real estate has the potential to be as big a problem for the economy as residential has been.
The calamitous condition of the real estate market is reflected in its total spending on advertising – Down 20 percent last year, but very unevenly across different media. While all other media choices lost revenue to one extent or another, online eked out a small gain – and a much larger increase in its share of overall real estate ad spending. The uptick expected in 2010 will also mask large di erences among media choices, as the following table indicates. Within these totals, advertising by locally-based real estate businesses spending to reach nearby consumers is actually heading up in 2010, although not enough to overcome the decline in spending by out-of-market advertisers.
Newspapers will see an increase in real estate advertising this year over last due in large part to spending by government agencies and banks to promote the sale of distressed properties. Other print vehicles will also rebound in 2010, but not their 2008 levels. Online advertising continues to dominate the real estate market, reflecting the consumer’s ongoing rapid adoption of the Web as a preferred method for researching homes for sale. The Web has now caught up to Agents as the top way that consumers found the homes they ended up buying. Within online real estate advertising, money is moving into marketing activities that do not rely on a media company to bring buyers and sellers together. Thanks to the proliferation of inexpensive database marketing tools and techniques, real estate advertisers are developing direct, one-on-one relationships with their prospects and customers through e-mail marketing, social networking and various promotions and public relations efforts.
A more immediate development within online advertising is the strong growth of video, which provides real estate shoppers with a much more immersive and compelling experience of the attributes of each unique property. The current pain and turmoil in the real estate industry will pass, but many of the changes in advertising spending behavior that are resulting from it will not be undone.
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