After two years of depressed housing sales, Realtors have cut their print budgets and put more money on the Web. The result has been a slingshot effect for online advertising, says a new report by online consulting firm Borrell Associates.

Total ad spending on real estate is down three percent this year, while spending online has grown 25.8 percent, hitting $2.6 billion. At this rate, online real estate advertising will grow 12.4 percent next year, while other avenues will lose advertisers. In three years, predicts Borrell, agents and brokers will spend more money online than with the newspaper.

Economic uncertainty makes it probable that the number of listings will decline and advertising budgets will also decline.

After average annual increases of about nine percent in total real estate advertising during the housing boom of 2001 and 2005, the market flat-lined in 2006 and is likely to fall by over three percent by the end of 2007, mirroring housing sales. This trend will likely continue into 2009.

This is bad news for newspapers, which hit a high of $5.2 billion in print advertising, now expecting a nearly 7 percent decline. Borrell's research suggests that 2008 will be the same and that ad sales will fall 16 percent in 2009 and 13 percent in 2010.

Going forward, online aggregators such as Yahoo! and Zillow will be closely watched by the real estate industry. Yahoo! is the second-most trafficked real estate site behind Realtor.com, and Zillow holds the No. 5 spot.

Since Borrell's report was completed, Zillow has announced partnerships with several franchises and brokers including ERA, and has launched a listings feed for brokers and aggregators. In addition, real estate agents can market themselves and their listings for free.

Published: December 21, 2007

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