Oh what a tangled Web: Many brokers say negative online press has hurt sales at some developments — and that the current real estate market was pushed lower faster because bad news travels fastest in cyberspace.
Which leads to the question: Could the speed of Internet news work the other way, leading to a quicker real estate market recovery?
Given the abundance of online data, listings and news sources that did not exist during previous recessions, some real estate insiders say it might — though the jury’s out on how helpful the Net will be.
“The Internet is a vehicle to disseminate both good and bad news,” said Adrienne Albert, the CEO of the Marketing Directors, a residential marketing firm specializing in new developments that relies heavily on the Web to promote condo projects.
The Internet’s power to lure potential consumers and educate them very quickly is the primary way it could help speed a recovery, said Albert and others.
“Opportunities are going to be more accessible,” said Albert. “You’ll see changes happening in a positive way and people will say, ‘Oh boy, I better get on the bandwagon.’ So the faster that good news gets out there, the faster the recovery will be.”
Bill Staniford, the CEO of PropertyShark, said that the Internet’s ability to rapidly communicate information “to the masses” through listings and news would be “key” to the market’s recovery.
“To exit the recession, we’re going to need more people interested in real estate, and more people aware of the information necessary to making decisions,” said Staniford.
PropertyShark rolled out residential listings for the first time this past summer, and Staniford said that home buyers are the site’s fastest-growing segment of visitors.
Online foreclosure listings, which have become more easily accessible in recent years through sites like PropertyShark, may also play a role in speeding the market’s recovery, Staniford said (see Foreclosure listings a boost to traffic).
Steven Spinola, the president of Real Estate Board of New York, said the real estate community has mined the Web to its advantage by expanding online listing services, sending e-mail blasts with information about new developments, and launching Web sites to promote properties.
But he said the Internet has also made the market more volatile.
“I would prefer to have a less volatile situation when it comes to real estate than what the Internet helps make it, but that’s like saying we’d like to go back to the horse and buggy,” he said.
If the Internet does play a role in the market’s recovery, Spinola said, it would be in its ability to inform the industry of developments quickly. “As a result of that, the same way the crisis was known instantly, if there is a sound indication of recovery, that information may spread quicker,” he said.
On a development-by-development basis, David Maundrell, founder of the Brooklyn-based brokerage aptsandlofts.com, believes that real estate blogs “can make or break” sales.
Last year, the blogs Curbed.com and GowanusLounge.com dubbed a development in Williamsburg “the Roebling Oil Field” because of an underground oil tank leak at the site that surfaced during construction work.
“It was completely and 100 percent cleaned up, but because of the blogs, there was a negative stigma to it,” said Maundrell.
Aptsandlofts.com is now marketing the condo, Warehouse 11, being built on the oil leak site. Maundrell said the 120-unit building at 214 North 11th Street has 40 units in contract, a number he thinks would be higher without the negative attention. Nevertheless, said Maundrell, “you take the good with the bad,” in terms of blog coverage.
“It’s free advertising,” he noted.
Another example of the bad, according to Maundrell, was blog coverage of a crane accident in January of last year, at a condo construction site at 349 Metropolitan Avenue in Williamsburg — which he said neighbors and real estate professionals now know as “the building where the crane toppled over.” But a Corcoran broker who represents the property said the accident had no impact on sales. “It happened very early on,” said Eric Heras, a senior associate broker. “The real consumer has a very, very short memory.”
The 36-unit development, which is still under construction, has 22 units in contract and another 12 have not been released, he said.
Heras said even he learned about the accident from a blog. But he added that even when news spreads online, there is an upside.
“I’d rather a buyer say to me, ‘Look, I read this on the blog,’ and then we have a discussion about it, and at the end of the day they rely on my expertise,” he said.
To be sure, online chatter about real estate transactions leaves no one immune, and it has become another market force to consider.
“Transactions I’ve worked on, I’ve read about them on real estate Web sites,” said Dennis Sughrue, an attorney at Herrick, Feinstein. “People avidly consult to find out which projects are in trouble, which lenders are in trouble. It has become another arrow in the quiver of the people who are looking to invest in the real estate market.”
But according to Sughrue, the online phenomenon could ultimately be a boon to the market, because nothing is kept secret. “That may accelerate finding the bottom, so that the real estate community will start to venture back into the real estate market,” he said.
Others are far less sanguine about the Internet’s ability to speed the market’s recovery.
“Right now, we’re kind of in a panic. The Internet doesn’t help in that way because bad news travels so fast,” said Eric Anton, the executive managing director of the real estate investment firm Eastern Consolidated, who said the Web would not improve the market. “It will not help us improve values or get things going again,” he stated. “Prices will keep going down until people start paying more. It’s that simple.”
The speed of online communication was evident during the recent collapse of Lehman Brothers and other large banks, veteran real estate brokers said.
“You knew things were happening hour-by-hour in some cases,” said John Wollberg, Eastside director of sales for the residential brokerage Halstead Property. Wollberg said Halstead brokers were utilizing the company’s Intranet to share information with each other. “I think we realized at the moment that if it was going to impact people in the financial world with their jobs, there would be an ultimate effect on our marketplace.”
Nevertheless, optimists believe that when the market starts recovering, the Internet will be key in terms of spreading the good word.
“There’s good news that’s going to travel fast, too. They’re going to say, ‘Boy, I got this great something over here,'” the Marketing Directors’ Albert said. “Once some positive news gets out, it’s going to spread like wildfire on the Internet.”