Google Inc. may crush all other Internet search portals, yet when it comes to real estate listings, its often less of a destination than a pit stop. But will that change?

The Internet search behemoth drives a ton of Web traffic to real estate sites everyday. Still, Google hasn’t made a major play for domination in the online property search market, unlike sites such as Zillow.com, Trulia.com and Yahoo Real Estate.

So when Google makes a move in the real estate space, everyone watches for clues that might signal the sleeping giant is hungry for a bigger piece of the real estate pie. Such a move came about last week, when Google decided to spruce up its popular Google Maps page to highlight its real estate search tools and also began making searches for home listings available in Australia and New Zealand.

In the short term, the move will boost traffic to other real estate Web sites, figures Bill Tancer, general manager of research for Hitwise, an Internet tracking firm. But long-term, could be a different story.

“It’s a competitive threat,” Tancer suggests.

Established online listing hubs like Trulia and Zillow aren’t quaking in their boots, yet. And they don’t appear to have any reason to, according to Google spokeswoman Elaine Filadelfo.

“We’re certainly thinking about ways to improve the product,” Filadelfo says, “but it’s more about improving user experience, as opposed to how can we become the No. 1 real estate destination.”

For years, Google invited real estate professionals and others to submit their listings of homes for sale to the site via the Google Base portal-for free. It began letting users of its maps tool look up homes for sale about a year ago.

Still, the company didn’t trumpet its real estate functions on its sparse home page. You had to dig to get to Google’s property search functions, which are primarily tied to its maps tool. Even there, the option to search for real estate listings was hard to find.

If you typed in, say, “real estate Los Angeles,” Google displayed links to real estate firms and showed a city map splayed with dots where those businesses were located.

Cue Google’s redesign last week.

Now, a real estate query on Google Maps brings up a page with a link in the top left corner advertising real estate listings search. Or you can select the search options tab and click on a drop-down menu that includes a link to search for real estate listings.

An easier way to get there from the main Google page is to enter the search term “Google housing search.” That kicks back a link for Google Maps Real Estate at maps.google.com.

This page has a search box for looking up properties currently on the market by city, suburb or neighborhood within Google Maps. Like in many other real estate Web sites, users here can refine their searches according to certain criteria, including number of bedrooms, bathrooms, square feet and price range.

Type in Los Angeles, for example, and the site shows a map of the city nearly covered with red dots representing everything from homes for sale to homes that have received a foreclosure-related notice. Zoom in closer and a bubble pops up with a photos, price and links for other information, including the Web site that is hosting the listing. Users also can use Google’s Street View function to get a virtual on-the-ground peek at the neighborhood for any given property.

Since Google put in the changes, Google Maps has begun driving more traffic to real estate Web sites, Tancer says.

That’s still a far cry from Google’s main search site, which Hitwise says is the No. 1 source of traffic to real estate Web sites. Last week, users looking up real estate search terms on Google.com generated roughly 24 percent of all traffic to real estate sites, Tancer said.

Greg Sterling, an Internet analyst with Sterling Market Intelligence in San Francisco, says it would be tough for Google to compete with real estate-focused Web sites.

“That would be difficult for them to do, given that there are sites … that have much richer and very specialized experiences around real estate that Google isn’t going to compete with because they’re not going to devote the kind of resources (needed),” Sterling says.

Trulia and Zillow executives say they’re not losing sleep over the possibility, either.

“The real estate search and transaction process is very complex and very nuanced,” says Pete Flint, CEO of Trulia. “Google just doesn’t have the focus to be able to deliver an amazing experience on this.”

We’ll see.

Before we get into the graph, and what it may mean, we should have a little math tutorial. A math lesson is probably the best way to make most people stop reading this column and move on to their horoscope, or the funny pages, but hang with us for a bit. What this graph shows is the number of homes that go under contract (blue line) and the number that actually go to settlement (red line) on a 12 month rolling basis. Now for the math part. By 12 month rolling, we mean the total number for a specific 12 month period. This graph starts with the 12 months ending December ‘07, then the 12 months ending January ‘08, February ‘08 and so on. By using 12 month rolling, we eliminate any seasonality in home sales, and the graph more clearly shows you a general trend line.

So, what does the graph tell us? First, let’s look at the blue line, which is the number of homes under contract, or what is sometimes called pending sales. Pending sales are higher than homes sold (the red line), because not all homes that get a contract end up going to settlement. There can be a whole variety of reasons a contract may fall apart. For example, someone might not get their financing approved, or home inspection issues could cause it to unravel. Regardless, the pending home sales line appears to have turned the corner in March ‘09, and there’s continued growth through the end of last month. That’s encouraging, since an increase in pending sales can be a leading indicator, suggesting future growth in the number of homes sold.

Interestingly, the spread between pending home sales (blue line) and homes sold (red line) has remained fairly constant, until the economy blew up in September ‘08. At that time, the spread began to widen, and in the last three or four months, there has been an acceleration in the spread. This would indicate that more contracts are coming apart, before people can get to the settlement table. Our own anecdotal experience would confirm what the graph shows. In real estate agent terminology, a pending sale that doesn’t get to settlement is called a fall-thru.

Banks are constantly changing and generally increasing the requirements necessary to get a loan. Plus, these days there’s a greater chance that someone could lose their job. This, along with an overall heightened level of consumer stress, can contribute to the chances a contract will encounter problems and end up as a fall-thru. Additionally, the period of time between when you get a signed contract and when you actually go to settlement is longer than it used to be. When houses were selling like hotcakes, there might only have been a couple of weeks or a month at the most between a signed contract and settlement. Now, primarily because of the difficulty in getting financing approved, the time from contract to settlement could be a couple of months. For a short sale or a foreclosure, this time could easily expand to six months or more. As a result, the spread between pending sales and homes sold may continue to widen. And, there could also be more of a lag time between changes in pending sales and when we see them reflected in actual homes sold.

When you look at the red line (total number of homes sold), it’s been a long and steep downward slide. In 2007, there were a total of 6,182 homes sold in Anne Arundel County. For the 12-month period ending last month, there were only 4,181 homes sold – a decrease of over 32%. Nevertheless, there might finally be some good news in that red line. As of April 2009, it appears to have hit bottom. Unlike pending home sales, we haven’t yet seen it turn the corner and start going up. But if we can stop the bleeding, that will be the first step in curing the patient. As we said, pending home sales tend to be a leading indicator. Consequently, we would be surprised if that red line doesn’t begin to go up a bit over the next couple of months. The only fly in the ointment could be a continued problem with fall-thrus. Agents are out there showing houses and writing contracts, but if the credit markets don’t pony up the money, that red line could stay flat for a while. However, real estate agents are eternal optimists. We choose to believe that better times could be just down the road.

This week, we took a look at the number of homes being sold. Next week, we’ll examine housing prices -where they’ve been, where they might be going and how they relate to the laws of economics. When you have falling prices, it usually means that supply exceeds demand. That’s what we learned in Econ101. But, in this age of tremendous government intervention and control, the laws of economics don’t always apply. Next week, we’ll show you the numbers and take a stab at where it might all be going, with respect to prices.

Patterson, Barry Real Estate’s president and chief operating officer, will depart amid a profound slowdown in the real estate deals that marked much of his tenure with the company. However, he will remain on board through the end of the summer to help Barry Real Estate restructure debt and secure financing for new government projects.

“I feel like I can do something different,” Patterson said. “I’m going to stay in the real estate world. Atlanta is my home.”

The lousy economy continues to quash the commercial real estate market, driving down rents and pushing out tenants.

Nearly a third of office space is flat-out empty in parts of Los Angeles, Orange, Riverside and San Bernardino counties. A fifth of the offices are empty in the once-crowded Burbank Media District.

Viewed just months ago as far less responsive to the troubles that sank the housing market, commercial real estate is in such a profound slump that the sector’s woes could threaten a broader recovery.

“The statistics are alarming,” said Joe Vargas, senior managing director of real estate brokerage Cushman & Wakefield. “And the turnaround could potentially be some time away.”

The sector is deeply connected to several troubled parts of the economy, including the frozen credit markets and the small retailer who can’t make his rent.

As a result, companies are moving out of buildings, not into them. Tenants who continue to rent are demanding — and getting — discounts.

Los Angeles County landlords are asking for an average of $3.08 per square foot per month for Class A buildings, down 5% from a year ago, according to Cushman & Wakefield, which tracks activity on a quarterly basis. In Orange County, rates plunged even more, with office building rents down 16%, to $2.61 per square foot.

Some upscale markets have seen even more dramatic drops.

“Tenants have the ability to trade up to better buildings,” said broker Bob Safai of Madison Partners.

In desirable Santa Monica, for instance, landlords eager to keep their buildings occupied have dropped their average asking price almost $1 a foot, to $4.74. Such reductions have spurred more lease deals lately, Safai said, but further landlord discounts are probably coming.

“The Westside still has some softening to do,” he said. “All markets do.”

Tenants can demand lower rents because landlords have so many empty spaces.

Overall office vacancy in Los Angeles County jumped to almost 16% in the second quarter, from 11% a year earlier, according to the Cushman & Wakefield report. In Westwood, a perennial favorite of Westside professionals, 18% of office space is vacant.

Vacancy at the John Wayne Airport area, home to many white-collar Orange County firms, reached 21%. Ontario, the heart of the Inland Empire office market, has 29% vacancy.

Part of the problem in Orange County and the Inland Empire is that developers built way too much office space during the boom, and now the market in those places is flooded. But even in downtown Los Angeles, where the last major office building was completed in 1992, vacancy rates rose to 16%, from 13% a year earlier. More than half a million square feet of office space has been vacated downtown this year.

The picture is also grim with regard to industrial space, including factories, workshops and warehouses.

Los Angeles County industrial vacancies averaged about 5% in the second quarter and could hit 10% by the end of this year, said Dwight Hotchkiss, another Cushman & Wakefield senior managing director.

The number of leases being signed has dropped as much as 50% from last year even though rents are down about 17%, he said. “Many companies have shut their doors.”

Vacancy is more than 20% in some parts of Riverside and San Bernardino counties, where landlords provide large distribution centers for companies that bring goods through the ports of Los Angeles and Long Beach. Because of the slow economy, such imports have declined substantially for several months.

Experts do not expect the region’s market for office or industrial space to recover any time soon. Commercial real estate is a lagging indicator of the economy that will not come back until well after the job market does.

Safai of Madison Partners predicts that the real estate market will roar again, but maybe not for three more years. “Everyone thinks that the market will take five years to recover from a downturn,” he said. “We’re already two years in.”

If you are moving to a home for the first time, you are going to be very pleased with all the new space you have available. You may have to even buy more “stuff.”

Since your landlord wants to keep his expenses to a minimum, he or she will probably not be spending much to improve the place, either.

When you own a home, however, you can do pretty much whatever you want. You get the benefits of any improvements you make, plus you get to live in an environment you have created, not some faceless landlord.

Second, your home appreciates. Average appreciation on a home is approximately five percent, though it will vary from year to year, and in some years may even depreciate.. Over time, history has shown that owning a home is one of the very best financial investments.

Imagine how much rent might be ten, fifteen, or even thirty years from now? Which makes more sense?

For example, assume your initial loan balance is $150,000 with an interest rate of eight percent. During the first year you would pay $9969.27 in interest. If your first payment is January 1st, your taxable income would be almost $10,000 less – due to the IRS interest rate deduction.

Property taxes are deductible, too. Whatever property taxes you pay in a given year may also be deducted from your gross income, lowering your tax obligation.

Five percent may not seem like that much at first. Stocks (at times) appreciate much more, and you could earn over six percent with the safest investment of all, treasury bonds.

But take a second look…

Presumably, if you bought a $200,000 house, you did not pay cash for the home. You got a mortgage, too. Suppose you put as much as twenty percent down – that would be an investment of $40,000.

At an appreciation rate of 5% annually, a $200,000 home would increase in value $10,000 during the first year. That means you earned $10,000 with an investment of $40,000. Your annual “return on investment” would be a whopping twenty-five percent.

Of course, you are making mortgage payments and paying property taxes, along with a couple of other costs. However, since the interest on your mortgage and your property taxes are both tax deductible, the government is essentially subsidizing your home purchase.

Your rate of return when buying a home is higher than most any other investment you could make.

If you are moving to a home for the first time, you are going to be very pleased with all the new space you have available. You may have to even buy more “stuff.”