Month: October 2015

[Study] Zillow rules real estate web traffic but lists far fewer properties

Quality, depth of Zillow’s non-MLS data in key markets questioned

Zillow Group’s (Z) two portals — Zillow.com and Trulia.com — get more traffic than realtor.com, but Zillow Group sites have fewer listings in most markets, and the two are losing ground in traffic.

That’s the finding of a lengthy study by BuildZoom.

And while Zillow has been increasing its total number of listings, it may not be able to close the gap if its current pace is any measure. Zillow, for its part, disagrees and argues its listing are growing weekly, and will do so for some time.

Right now, Zillow and Trulia together dominate the market in terms of traffic, but realtor.com recently surpassed Trulia to become the second most popular portal, according to the BuildZoom chart below.

Click to enlarge

(Source: Barclays)

Another difference is the sites are not equal in the quality of listings, nor do they have equal coverage in major metros, BuildZoom says.

BuildZoom.com Chief Economist Issi Romem has been looking at the question since April after ListHub pulled its contract with Zillow Group, and his findings seem to suggest that realtor.com is correct on quality in many markets.

“…(T)he number of listings being provided still varies widely from city to city. According to comScore, Zillow and Trulia combined attract far more web traffic than Realtor.com,” Romem says. “However, since News Corp (NWSA) acquired realtor.com the number of unique visitors to that site has steadily grown.”

Romem says that depending on the market, the portal buyers choose to search may be more important than they realize. realtor.com has an advantage despite getting less traffic than Zillow Group’s combined sites, he says.

“Before its recent acquisition by News Corp, realtor.com operator Move, Inc. had a 10-year head start, backed by the National Association of Realtors,” Romem says. “This advantage has translated into the realtor.com site having more timely, accurate and comprehensive nationwide listings. This is a result of receiving and updating data from almost all of the 800+ multiple listing services in the U.S. every 15 minutes.”

He says that the discrepancy between the number and quality of listings available on the Zillow Group portals and on realtor.com attracted a great deal of attention in April, whenListHub — a key aggregator of MLS data, now controlled by News Corp — terminated the contract, and stopped providing listing information to Zillow Group.

“In anticipation of the event, Zillow Group scrambled to negotiate its own agreements with individual MLSs to obtain listings which it had previously obtained from ListHub. By mid 2015 Zillow Group had signed agreements with just over 300 MLSs,” BuildZoom’s Romem says. “We tracked the overnight change in the number of listings on the different portals after ListHub’s agreement with Zillow Group expired. Since then, we have kept track of the listing coverage for the core cities of the 51 largest U.S. metro areas.”

The following chart reports the number of listings on Zillow.com as a share of the number of listings on realtor.com, contrasting April 15 to Sept. 21 of this year.

The lighter blue shade in the chart below is Sept. 21, and the darker is April 15. For each city, the bar shows the percentage of listings Zillow had at each time period studied as share of what realtor.com had listed. So in metros like Birmingham, Alabama, there was little gain in listings for Zillow, but in metros like Raleigh, North Carolina, and Las Vegas, for instance, Zillow gained a significant amount.

Click to enlarge

(Source: BuildZoom)

According to the chart, as of Sept, 21, Zillow.com has fewer listings than realtor.com in 42 out of 51 cities.

“The discrepancy is often quite substantial: in 30 of the 51 cities, Zillow.com has more than 20 percent fewer listings, and in 15 of the 51 cities Zillow.com is behind by more than 60%,” he says.

In a handful of cities — Los Angeles, New York, Phoenix and Detroit — Zillow.com provides more listings than realtor.com.

“While this may indicate the absence of some listings on realtor.com, it may also reflect data quality issues in Zillow’s database, such as incorrect listing details, or duplicate or expired listings,” Romem says. “We encourage readers to compare listings in these cities and form their own opinions.

What that means is Zillow Group’s “excess data,” he said, is likelier to come from non-MLS sources whose reliability is less certain.

Katie Curnutte, vice president of communications and public affairs at Zillow Group, disagreed about the quality of Zillow’s listings.

“Zillow now obtains all listings directly from MLSs or brokers, and our listing count is growing weekly,” she said in a statement to HousingWire. “We continue to add partnerships, and expect this to continue for some time.”

Romem argues that at least superficially, the numbers appear to support realtor.com’s claim of having superior data.

Which raises the question: Does realtor.com’s advantage matter for Zillow Group?

“As long as Zillow Group continues to draw substantially more traffic than realtor.com, agents and brokers will continue to feel compelled to advertise on its portals,” he says. “As a result, Zillow Group’s revenue is less sensitive to its listing coverage as one might think. Yet the danger remains that consumers will eventually recognize the discrepancy and flock to realtor.com or elsewhere in search of more comprehensive and accurate listings. If this happens, agent and broker dollars will follow.

“Going forward Zillow Group has the ability to close the listing gap as it continues to sign additional local MLS agreements, but will it succeed?” Romem asks. “Judging by its limited progress on this front between April and September — it is destined for an uphill battle.”

On Friday, Zillow sent an order to cease-and-desist order to BuildZoom in response to the information contained in BuildZoom’s study.

Zillow is trying to grow beyond online listings, positioning itself to try to take the lead in the online transaction revolution with such moves as its recent acquisition of DotLoop.

The company had a profitable second quarter, with Zillow Group reporting that its revenue increased 20% to $171.3 million from pro forma revenue of $142.8 million in the second quarter of 2014.

This exceeded the high end of the company’s outlook by $2.3 million, along with beating analyst revenue expectations by $2.58 million. Excluding market leader revenue, revenue increased 25% to $158.7 million from $126.8 million in the second quarter of 2014 on a pro forma basis.

Black Knight: Cash-out refis up 68% since 2Q 2014

Volume still 80% below 2005 levels

Cash-out refinances were up 68% year-over-year from the second quarter of 2014, as borrowers take advantage of still-low rates and newfound equity in their homes, according to Black Knight Financial Services.

This is the highest volume of cash-out refinancing in five years, but still nearly 80% below the peak in 2005.

As Black Knight Data & Analytics Senior Vice President Ben Graboske explained, borrowers have been capitalizing on increased equity available in their homes and still historically low rates.

“In the second quarter of 2015, we saw cash-out refinance volumes rise almost 70% from the same period last year,” said Graboske. “While this is the highest volume in cash-out refinances we’ve seen in five years, it’s still nearly 80% below the peak in Q3 2005. Even so, it’s clear that borrowers have been capitalizing on the increased equity available to them.

“As we reported in last month’s Mortgage Monitor, total equity of mortgage holders has risen by about $1 trillion over the last year, and ‘tappable’ equity stands at $4.5 trillion,” he said. “Borrowers today are pulling out an average of $67,000 of equity through cash-out refis, nearly the levels we saw back in 2006. What’s really interesting though, is that even after pulling out that equity, resulting average LTVs are at 68%, the lowest level we’ve seen in over 10 years.”

He said that during this same time span, second lien HELOC lending rose, albeit at a lesser rate—that volume is up 40% from last year. However, as interest rates rise, there could be an increase in HELOC lending and corresponding slowing in first lien cash-out refis, as borrowers will likely want to hang on to lower rates for their first mortgage while still being able to tap available equity.

In its analysis of refinance transactions in comparison to prior loans, Black Knight also found that the distribution of cash-out refinances is highly concentrated geographically, with over 30% of all such transactions occurring in California alone.

Texas is second among states in terms of cash-out refinance volume, at just 7% of the nation’s total. Looking at Q2 2015 refinances in general, the data shows that borrowers are saving an average of $136 in principal and interest each month through refinance and cutting their interest rates by just over one%; the lowest such reductions in nine and five years, respectively.

These low averages are primarily due to the fact that borrowers refinancing are either lower unpaid balance (UPB) borrowers that haven’t yet taken advantage of low rates (and who will see lower monthly savings), or higher UPB borrowers that are taking advantage of low rates for a second or third time, and so are seeing incremental savings as compared to earlier reductions. Black Knight also observed increased interest among borrowers in securing term reductions through refinancing, with 34% of rate/term refinances in Q2 2015 including a term length reduction.

Of particular interest to banks and mortgage servicers, this month’s Mortgage Monitor also looks at the increased foreclosure timelines introduced by Fannie Mae and Freddie Mac, and the potential impact those extensions have had on compensatory fee exposure. In addition to the 34 states where extensions have been introduced, the compensatory fee moratorium currently in place in New York, New Jersey, Massachusetts, and Washington, D.C., was extended from June until Dec. 31, 2015.

New York and New Jersey alone carry two-thirds of the country’s compensatory fee exposure, even though these states only account for 27% of active GSE foreclosure inventory. All totaled, the states covered by the existing moratorium account for 74% of remaining compensatory fee exposure, and the foreclosure timeline extensions result in roughly a 38% reduction of gross compensatory fee exposure in non-moratorium states. Lifting the moratorium – with timelines remaining as they stand now – would result in nearly a quadrupling of mortgage servicers’ compensatory fee exposure.