A Few Thoughts On The Zillow Housing Forum


Two weeks ago, Zillow organized a small event in Washington DC with the title “Getting Our House In Order: Solving the Lingering Issues of the Housing Recession”. The full program was filmed and is available here. If you’re pressed for time, you can get the highlights here. I was on an airplane to California then, so could not attend. Not that I’d have flown to DC on a moment’s notice in any event, but… of all of the industry related events this year, this was the one I most would have liked to have gone to.

For once, a real estate industry event where “social media” wasn’t a panel topic? Sign me up, Scottie.

There have been more than a few people who noticed, not the least of which is the Washington Post, but… because the Post is general media, there are a few things here that are getting missed. Or, more accurately, few people are as oddly obsessed about Big Picture Industry Prognostication — all predictions sure to be wrong, or your money back — than I am, so… I haven’t seen much higher level thought on the Forum or the topics.

Let me offer a few thoughts. Because from where I sit, the Zillow Forum was extraordinary for a variety of reasons. Those interested in big picture trends in the industry ought to think about these things, in at least a cursory way.

The Policy Angle

I suppose the first place to begin is with the actual topics discussed at the forum. I was hoping that given the heavy hitters who were speaking, we might actually get some real news on the policy front.

I was disappointed. Things are going to happen, at some point, and after much jawbone movements by the elite intellectuals of the Acela Corridor, but I think the single most prescient point came from Richard Smith, CEO of Realogy, who said nothing was going to happen anytime soon.

I mean, the biggest news that came out of the Zillow Forum was news that nothing would be done for a while:

Closing out the day was Acting FHFA Director Edward J. DeMarco, who captivated the audience by announcing that changes to the limits in amounts of mortgages backed by Fannie Mae and Freddie Mac – known as conforming loans – would not change until at least next spring. Instead, government guarantee fees charged by Fannie Mae and Freddie Mac would continue to be gradually raised, making them more expensive and making private, non-government options more competitive.

I suppose investors would find that captivating, but the news that conforming loan limits won’t change for a while isn’t going to inform any strategic considerations. Might have been more interesting if DeMarco had actually announced that the limits are going to change. 🙂

The rest of the speeches and panels amounted to telling the DC insiders (many of whom were in the room, I’d imagine) that Congress needs to do something. As if they didn’t know that. And then a bunch of white guys talked with each other on a variety of plans which may or may not be adopted at some distant point in the future after electoral considerations, lobbying by various parties, and other priorities of both the Administration and Congress (little things like the debt limit, budget, Obamacare, immigration and various non-wars with Middle Eastern countries) are taken care of.

The big takeaway, again, is that nothing will be done anytime soon. We shall see. Because I’m far more paranoid than most people when it comes to governments and bureaucracies.

Just because there weren’t major policy announcements, however, doesn’t mean that there weren’t important takeaways, especially for real estate industry people. Let’s cover a few of those.

The Washington Post Was Impressed

We might as well begin with one of the few mainstream media treatments of the event. The Washington Post covered the event in an odd place: the Wonkblog, written by Lydia DePillis. The post was entitled, “Here’s Zillow’s strategy for dominating online real estate“, which is sort of an odd title for a blog devoted to policy issues. DePillis writes:

The guests were familiar, but the day of panels and speeches was also sponsored by a relative newcomer in D.C. policy circles: Zillow, the real estate listings Web site, which organized the agenda and supplied branded notepads and information booklets. By the end of the day, attendees would leave knowing not just the proposals on the table for fixing Fannie Mae and Freddie Mac. They’d also know the value of the Zestimate and Zillow Home Value Index for assessing the state of the market, and they’d know about the suite of other services Zillow makes available for free.

This eight-year-old company, which has no D.C. office and just one lobbyist on retainer to build relationships,* has managed to put itself at the center of the conversation about housing in Washington and beyond. If you want to know how leading lawmakers are looking to reform mortgage finance or you want to see an interview with President Obama on the topic, you’ll probably eventually find yourself watching clips from Zillow events (which is very good for Zillow’s stock).

The company’s rise — and rising influence in the discussion on housing policy — is a unique tale of a start-up leveraging its data to challenge an old business by redrawing competitive boundaries. Zillow is simultaneously taking on traditional real estate agents, media companies and publishers of housing data — and it’s threatening all of them in the process.

Not a bad tactic when you’re trying to corner a market. [Emphasis added]

DePillis got halfway there. Note the highlighted, and we’ll return to it anon.

She also spoke with Spencer Rascoff, the CEO of Zillow, at some length and reported that Zillow took its data and its “Zillow Home Value Index” to Washington DC, eventually got invited to Congress to testify about the market, and then did a bunch of clever events with heavy hitters in DC, including Shaun Donovan, HUD Secretary, President Obama, and Sens. Warner and Corker. She writes:

“It was absolutely part of our marketing plan,” Rascoff says. “As a result of being the biggest real estate site on the Web, increasingly politicians are coming to us to say, ‘Hey, how can we get the word out, and how can we interact directly with homeowners?'”  (That’s not always the case — Warner’s office says that Zillow reached out to the Virginia senator first. HUD and FHFA didn’t respond to questions about how their respective Zillow collaborations came about.)

Now, the Zillow Home Value Index is starting to be cited nearly as much as indicators that have been around for a lot longer, and recorded conversations with a Zillow logo underneath them are among the most accessible ways to hear from government officials about how the housing finance system might get overhauled. That’s really important for a company that views itself as a media play, dependent on high volumes of people who trust its content (as distinguished from real estate search sites like Redfin that actually employ real estate agents*).

DePillis suggests that Zillow is doing these events with policymakers simply as a marketing ploy, writing that its webcast with President Obama beats a Super Bowl ad. Perhaps.

The Marketing Angle

So… what does an industry blogger type do when trying to look at this event as a marketing play? Well, I called Zillow and got to speak to Katie Curnutte, the Director of Communications, who is the main organizer of these policy-oriented events, as well as with Amy Bohutinsky, the Chief Marketing Officer of Zillow.

What I got out of those conversations is that Zillow’s engagement with the policy establishment goes way beyond simply free advertising. It is a pillar of Zillow’s brand whitespace strategy. From the start, Zillow’s been giving away data to policymakers, think tanks, academics, and other influential elites. It might have begun as a possible bizdev effort just to sell data to heavy data users (Katie mentioned that the Federal Reserve is a heavy user of Zillow data), but that isn’t a big thing today, if it ever was.

Here’s what I wrote in the 2012 Report (Premium, remember) where I discussed Zillow’s branding play:

Seems to me that Zillow wants to dominate real estate the way Ebay dominates auctions, Amazon dominates e-commerce, and Facebook dominates social media. Becoming the central hub for the real estate professional is but one step in this grand ambition. The lack of a strong brand in real estate — sorry, marketers at various brokerages who want to disagree — provides Zillow with the opportunity to become the brand for real estate in much the same way that Xerox became the brand for copiers and Coke became the brand for dark brown sugary beverages.

Part of being THE brand is to be part and parcel of the vocabulary of elite intelligentsia who influences so much in our society. Media — especially the DC-based political journalists — follows the lead of people they cover.

I can’t imagine that Zillow thinks these webcasts are more effective than a Superbowl ad (assuming that Superbowl ads are effective at all). When DePillis talks about the attendees of the Zillow Summit knowing the suite of services that Zillow offers, that’s clearly not the point. The Zillow Forum attracted at most a couple hundred wonks and think tankers and Congressional staffers and the like. I doubt Zillow cares all that much about picking up a couple hundred users.

What these policy events do for Zillow, however, is something a bit deeper and more valuable.

Consider for a moment that when Zillow hosted the Obama chat, NAR responded by calling Zillow an “entertainment website”. NAR’s position was that the webcast wasn’t a “serious public policy discussion.” Well, when you can get the Commissioner of the Federal Housing Finance Administration to show up, and get a sitting US Senator to participate on a serious wonk-fest panel having a discussion over the heads of 99.99% of the population, and serious journalists like Nick Timiraos and Diana Glick get involved… those criticisms of Zillow are going to fall on deaf ears.

Journalists, at the very least, will take Zillow seriously after this heavy-duty policy forum. Those journalists have now been inoculated against the positioning of Zillow as a fluffy, lightweight “housing porn website”.

The engagement by Zillow of the BOS-NY-DC elites at the level of data and policy helps Zillow take a huge step forward on its quest to become the brand for real estate. One day in the not too distant future, the media and policymakers may not be referring to the Case-Shiller Index or the NAR New Home Sales Index as much as they do the Zillow Home Value Index. News story after news story will be leading with “The nation’s housing market is on the rebound, according to Zillow….”

Lest we forget, the S&P 500 is produced by a private company: Standard & Poors. NYSE and NASDAQ are both private companies. The world tracks the health of the US economy by those names, and as a result, those companies have come to dominate the financial world.

Zillow aims at nothing less. It wants to be the housing market, much like NYSE and NASDAQ are the stock market. So far, it’s succeeding.

The Voice of the Consumer

Another subtle, yet important, thing that this forum does for Zillow is that it positions Zillow as the semi-official “voice of the consumer” in the halls of power.

That position, of course, is one that NAR has coveted for years. Consider this:

It is clear that NAR has been pivoting to consumers in recent years. The entire premise of defending homeownership is that REALTORS are not acting as a trade association pushing the special interests of people who make a living off of buying and selling houses, but acting on behalf of the public, of the consumer, to defend the American Dream.

Naturally, I asked Katie Curnutte about NAR. Did Zillow consider NAR to be a competitor? (Because it seems to me that NAR does consider Zillow to be a competitor.)

Her answer was an emphatic “No”. But the reason why Zillow doesn’t consider NAR as competition is illuminating.

Her view — and therefore, I assume Zillow’s view — goes like this:

  • NAR is an advocacy organization, and they do that very well. They represent REALTORS in Washington.
  • Zillow, on the other hand, puts the consumer first, and gives the consumers the information that they are clearly thirsting for.
  • When you want to know what REALTORS think, DC policymakers ought to go talk to NAR. But when you want to know what the average American thinks, then policymakers ought to talk to Zillow.

NAR’s campaign to represent the consumer is in its early stages, but… I have to think that within the Beltway, Zillow has already taken that position as the Voice of the Consumer. They have the eyeballs, they have the reach, and as Spencer, Katie, and Amy all suggested, when politicians want to reach the public, they go to Zillow.

So… where was NAR during this Housing Forum that cannot be dismissed as a “not a serious public policy discussion” by an “entertainment website”? I asked Zillow about that.

The answer was that Zillow had certain “slots” for their speakers, and to represent the real estate industry, they already had Richard Smith, CEO of Realogy. Hard to say Richard Smith doesn’t represent the industry’s viewpoint. So… NAR wasn’t invited.

I’ve reached out to NAR to see if they had any thoughts. I haven’t received any comments.

Look, I don’t know whether excluding NAR was intentional or not. But let’s just say that it doesn’t look good for NAR to be on the outside looking in when a major policy thinkfest like this is going down with heavyweights in housing policy arena. (More on this below.) Maybe NAR’s reasoning is that its lobbyists are on the speed dial of everyone who was at that Forum, they already have the ears of these policymakers behind the scenes where they really influence things, so there was no need to go to a marketing event put on by an entertainment website. That may very well be the reality.

But what about that whole “reaching out to consumers” deal? If Hillebrand and Warner and DeMarco thought this Housing Forum was an effective way of getting their message out to the public, why wouldn’t NAR think to use it to get its message out to the public?

There are those who see this as some sort of an “us vs. them” situation, and accuse me of somehow pushing Zillow’s agenda, or worse, being secretly on Zillow’s payroll. That misses the point completely, besides being offensive.

The real point to consider is why organized real estate is in conflict with Zillow (and Trulia and Realtor.com and any other “portal”) on the crucial issue of reaching and informing consumers.

NAR’s online consumer effort, Houselogic.com, could charitably be called underwhelming. If one were being honest about it, one would simply call it an epic fail. Or, if you’re Greg Robertson of VendorAlley, you’d call it a “turd” that needs flushing.

Houselogic has been around for over three years now, having launched in beta in November of 2009, and fully launched in February of 2010. Here’s its 2013 stats:

Screen shot 2013-11-03 at 8.21.48 AM

Not only is the 619K unique visitors for August 2013 embarrassing given that Houselogic has gotten marketing support from all of NAR, including mentions in TV commercials (see the end of the embedded video above), but the red line is trending downward. Year-over-year, Houselogic has lost almost 100K uniques — not exactly going in the right direction.

The top five most popular pieces of content on Houselogic for August of 2013 were:

  1. 10 Things a Burglar Doesn’t Want You to Know
  2. More Trees You Should Never Plant in Your Yard
  3. The Plants You Shouldn’t Plant in Your Yard
  4. 11 Trees You Should Never Plant in Your Yard
  5. 8 Houses That Don’t Seem Real, But They Are!

You would be forgiven for thinking that NAR is operating a gardening website looking at that list. That whole “entertainment website” snark rings a bit hollow when the consumer engagement website of NAR, whose central theme of the last few years has been “Defending the American Dream”, looks like this today:

Screen shot 2013-11-03 at 8.39.47 AM

Value of fireplaces and stunning fall trees. Edible walls. Solar-powered dryer (as an aside, isn’t that called a clothesline?).

It is high time for NAR to hit the big reset button.

Here’s how I see things.

Given that the President reaches out to Zillow when he wants to connect with consumers, perhaps NAR could drop whatever feud it has going on with Zillow and figure out how to work together for mutual benefit? It isn’t as if defending homeownership doesn’t benefit Zillow and its paying customers (brokers and agents). Both organizations have a vested interest in buyers and sellers continuing to be able to buy and sell homes. Plus, NAR can take a different, ground-game based approach to consumers that no portal in the world could do.

At a minimum, given that NAR has gone all-in with REALTOR.com, at least have Move take over Houselogic.com and try to get the actual homeownership and policy issues in front of REALTOR.com’s 29 million unique users (Q2/2013). As Bob Bemis suggested, flex those institutional relationship muscles you have, and host a serious policy forum on mortgage interest deduction and tax reform, and stream that live on REALTOR.com.

I know in certain precincts of the real estate world, criticizing the Mothership is a big no-no. Maybe I’ll get hate mail. But all I can say is that I want to defend and protect organized real estate, and somebody has to be willing to say the uncomfortable things. NAR is filled with good people doing hard work, but it isn’t perfect. I hope the criticism and suggestion are taken in the spirit in which they are given — out of love and concern.

Because if we can’t find a way to get along… there are other concerns folks ought to have.

Friends In High Places

I left this for the end, because it is, in a way, the most significant and most subtle takeaway from the Zillow Forum.

You see, the Zillow Forum is actually not the correct way to describe the event. The correct description would be the Zillow-BPC Forum. Who/what is the BPC?

The Bipartisan Policy Center might be one of the most influential think tanks in Washington DC. It was founded by four DC heavyweights: Howard Baker, Tom Daschle, Bob Dole, and George Mitchell. Two Democrats, two Republicans, all of them leaders of their respective parties, with enormous networks and influence.

And the Housing Commission reads like a Who’s Who of national housing policy, including two former HUD Secretaries, former US Senators, captains of industry like Richard Smith of Realogy and Frank Keating of the American Bankers Association, activists like Nan Roman and Barry Zigas, and so on and so forth. (By the way, remember that observation about NAR being left out in the cold? Why isn’t Dale Stinton on the BPC Housing Commission? American Bankers Association has a seat at the table, but not NAR? #thingsthatmakeyougohmmm)

The BPC’s report from earlier this year, Housing America’s Future, is more or less the blueprint for both the Warner-Corker Senate bill and the Obama Administration’s housing policy, as pronounced by President Obama in Phoenix, AZ earlier this year.

Look at just a few of the speakers and panelists at the Zillow-BPC Forum:

  • Gail Hillebrand, Associate Director Consumer Education and Engagement Division, U.S. Consumer Financial Protection Bureau
  • Carol Galante, Federal Housing Administration Commissioner and Assistant Secretary for Housing
  • Gov. Frank Keating, president and CEO, American Bankers Association
  • U.S. Senator Mark R. Warner (D-VA)
  • Jim Millstein, chairman and chief executive officer, Millstein & Co., L.P.
  • U.S. Representative Randy Neugebauer (R-TX-19)
  • Edward J. DeMarco, acting director of the Federal Housing Finance Agency

I don’t know who attended the Housing Forum, but given the list above, I’m going to guess that very few DC housing policy wonks missed the event. I’m going to guess that very few lobbyists connected to housing (with perhaps the significant absence of NAR) did not attend. There’s almost no chance that people like Hillebrand, Galante, and DeMarco attended without assistants and deputies also coming along. There’s no way that sitting Congresscritters attended without at least a few staff members in tow. All of those people got the Zillow notepads and such.

Zillow played the role of the neutral facilitator, not pushing any visible agenda of its own. But simply the fact that it got these people in the same room at the same time sends a clear message in the halls of power. Zillow has friends in very high places. Zillow has the golden currency of the BOS-NY-DC corridor: ACCESS.

Think about the conflicts roiling the industry today. I have been getting hammered because I keep arguing that the whole syndication fight is (a) ridiculous, and (b) counterproductive. I have openly worried about the MLS becoming classified as a public utility. I have fears about government regulation that trump any fear of how some tech company makes money.

Meanwhile, we have real estate people going crazy when it comes to Zillow. It’s like they can’t see straight. Rallying cries of “take our data back” and “we can compete with these portals” and “they’re making money off our data” ring out from all over. That’s all fine and dandy, and I have a lot of sympathy for many people who feel that way. I do.

But… just how much do you want to be going after a company that has Friends in High Places in today’s America? Do we really want the push to come to shove in the stupid war between the tech companies and the real estate industry?

There are far too many people who want to take concerted action of one kind or another against Zillow, Trulia, and other web companies, all in the name of “data accuracy” and “consumer protection” and so on. The common belief amongst all of those people is that should the industry ever band together to “do something”, these big fancy tech companies have no choice but to take it in the shorts.

Really? Is it that inconceivable that Zillow might pick up the phone and call some of their Friends — folks like the CFPB and FHA and HUD — and point them in the right direction or two to look? Today, the status quo benefits Zillow, as evidenced by the mountains of cash they’re piling up. Should that change, do we really expect that Zillow would sit still and do nothing at all? Maybe.

I have no idea whether Zillow would do such a thing. But I do know that they could do such a thing. They have the access. They have Friends in High Places.

That is the real significance of the Zillow-BPC Housing Forum.

Calling for a Peace Process

In light of the Zillow-BPC Housing Forum, I am once again calling for a truce between the industry and the technology companies. If we can’t have an outbreak of peace and cooperation overnight, at least we can do the whole “peace process” thing and start earnestly negotiating steps towards de-escalating the conflict and escalating the cooperation.

The NAR Convention is around the corner. I’d like to suggest that the principal players get together in a room and figure something out.

How about this as a start: the NAR Midyear Meetings are in May. NAR can put together a major policy forum inviting the heavyweights, and webcast the proceedings on all three major portals — Zillow, Trulia, and REALTOR.com. Those companies can co-sponsor the event, and maybe get some DC power players (like the BPC) into it as well. Make it a separate day-long track where both REALTORS and the public can attend to participate in a Housing Town Hall.

That could be the start of a beautiful friendship.


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Rob Hahn

Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

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