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The Next Real Estate Boom Will Be in Zillow and Trulia

In tech, everyone is looking for the next Apple (NASDAQ:AAPL). Or at least, the next Apple before it became the new Apple.

Anyway, you get the idea.

The point is, companies that use innovative, easy-to-use technology to connect consumers with important information are tomorrow’s big winners.

And for prospective homebuyers, companies like Zillow (NASDAQ:Z), Trulia (NYSE:TRLA), ZipRealty (NASDAQ:ZIPR) and privately held Redfin could be game-changers on the same scale as the first generation the iPhone.

Check out this infographic, courtesy of BusinessWeek. Since 2001, the number of homebuyers who have found their property online as opposed to via a real estate agent has exploded — and since 2009, the majority of homebuyers have used the Internet to find their property.


That includes me — I researched a host of homes on my own in 2009 before ultimately telling my agent to drive me to the address where I now live.

This is the same kind of megashift that has given rise to a host of other Internet winners. Here are some names you might recognize:

  • Online retailing gave rise to Amazon.com (NASDAQ:AMZN) and eBay (NASDAQ:EBAY).
  • Online travel booking displaced travel agents and gave rise to high-flying stocks like Priceline.com (NASDAQ:PCLN) and Expedia (NASDAQ:EXPE).
  • Online job listings killed classifieds and fueled Monster Worldwide (NYSE:MWW) and, more recently, LinkedIn (NYSE:LNKD).
  • Online media birthed the streaming businesses of Netflix (NASDAQ:NFLX) and Pandora (NYSE:P).

And home listings are the new frontier.

This is not to say that real estate agents are a dying breed. Zillow and Trulia display listings, then connect consumers with agents who can close the deal. And other folks like me simply use the database as a tool once they have found an agent they trust.

There are undoubtedly those agents who know their hometown — and more importantly, know the paperwork and the angles — to make a good living.

But there also serious are risks to the industry posed by informed consumers with a powerful online tool like Zillow, Trulia and others. And if they have the chops, homebuyers and sellers can save a heck of a lot of cash by shepherding the transaction on their own.

It’s wishful thinking to assume that this online real estate phenomenon is just a fad. Zillow is up about 50% since its IPO and about 80% year-to-date on the housing recovery trend. Trulia went public late last year, so its headline returns are not as impressive, but it too is up almost 80% in 2013.

If you’re an investor looking for the next big thing in tech … well, these stocks might be it.

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Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.

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