Web analytics firm Nielsen//NetRatings suggested two reasons why traffic on real estate Web sites spiked after the Federal Reserve hiked its benchmark interest rate earlier this month. Both reasons seemed logical, but neither of them adequately explained what happened or why.
The two reasons were that the summer is “traditionally peak season” for home sales and that a decline in “interest rates” spurred activity from “folks who would like to buy or sell a home before the general trend towards high interest rates continues,” a Nielsen//NetRatings analyst said in a statement.
The first reason can be discarded because it doesn’t account for a sudden spike in traffic in the middle of the summer nor does it link such a spike to the Federal Reserve’s action. The second reason is more complicated. It should be dismissed because it rests on the erroneous belief that mortgage interest rates are tied directly to the Fed’s benchmark rate. They aren’t. But the belief that they are could have triggered a spike in real estate Web site traffic.
Immediate-need home buyers might have raced to real estate Web sites because their fear of higher interest rates motivated them to broaden their home-shopping criteria or lower their expectations. A quick surf would reveal any listings that might be worth a look.
On-the-fence buyers might have jumped on those same Web sites, too, and for similar reasons. But that doesn’t mean those folks were ready to buy. They just as easily could hop back on their fences and remain perpetual Lookie Lous.
Sellers whose homes were on the market might have raced to real estate Web sites because they were worried that new listings would be priced lower even though mortgage interest rates haven’t been significantly higher in recent weeks. A quick surf would reveal any new cheaper competition.
On-the-sidelines sellers might have taken the Fed’s action as a sign that the housing market had hit the illusive “top.” But again that doesn’t mean those folks were ready to sell. They just as likely could stay put and continue to wait for that “top” of the market.
The media is part of the mix as well because news reports about the Fed’s interest-rate actions almost invariably suggest they will affect the housing markets. Such reports prompt a lot of people to jump onto real estate Web sites not only to get the latest news, but also to reassure themselves that their own house is still worth a bundle and the not-as-nice house for sale down the street is still priced at a bundle and then some. But those folks aren’t buyers or sellers.
The fearful buyers, worried sellers and news reports capture the attention of real estate agents and other people whose livelihoods are affected by the housing markets. These pros then also jump onto real estate Web sites to get market information. But unless they’re in the market on their own behalf, they aren’t buyers or sellers either.
All those people together create a kind of water-cooler buzz in the office (or cyberspace), and that snowballs into even more people on real estate Web sites. Add it all up and, sure, the Federal Reserve’s quarter-point rate hike could have generated a spike in real estate Web site traffic.
But then again, it’s quite possible that the Fed had no discernable effect on real estate Web site traffic and that the spike in traffic was the result of the Independence Day holiday or was nothing more than coincidence.
Reuters reported that traffic on Nasa.gov “rocketed 84 percent as the Cassini spacecraft arrived at Saturn” and that traffic on “True.com soared 319 percent,” according to NetRatings’ other results for the same week. Consider those numbers and the whole the Fed-spiked-real-estate-Web-sites thing starts to seem rather suspicious. Would anyone argue that the Fed’s action also triggered a sudden huge interest in outer space and Internet dating?
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