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March 20, 2007

Real Estate 2.0 (and beyond?)

Last week while pondering about my finance class, this article on Zillow came to mind.  It brought up a lot of great points about how Zillow is and could dramatically change the way we think of real estate transactions. 

If Zillow were to completely revolutionize the real estate market by making realtors unnecessary, would the lower cost of real estate transaction decrease the time the average person lived in a residence?  Would the amount of time a home is on the market decrease as well?  Especially with the "Make Me Move" feature where you can list what price you are willing to sell for.

Would this introduce more investors into the real estate market regardless of boom or bust?  We might see investors pop-up with sophisticated algorithms and day trade real estate to take advantage of small swings in the market. Albeit moving would still be a pain (for those who wished to live in the home) and knowing about the kinks in a house would take a lot of analysis (and honesty), but anything is possible when you don’t need a property to appreciate by more than 6% to break even.

If Zillow could completely automate real estate transactions and investors controlled the majority of housing, real estate might look a lot more like stocks do. Real estate exchanges and everything. How long for this scenario?  Optimistically probably 20-200 years. :-)

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