Zillow Is Growing When the Housing Market Is Frozen

For many Americans, the housing market isn’t working. Prices are too high for many buyers, and owners who locked in low mortgage rates are reluctant to sell.

Last year, home sales languished at the slowest pace in 30 years.

That hasn’t stopped millions of people from scrolling on Zillow, the country’s largest site for real estate listings. In fact, it’s one of the country’s largest sites of any kind: Each month, it attracts nearly 230 million unique visitors. “Zillow Surfing” is a thing.

Jeremy Wacksman, 48, took over as chief executive of Zillow a year ago, after stints as chief operating officer and chief marketing officer. And he’s no stranger to tough housing markets: He started at Zillow in 2009, in the thick of the subprime crisis.

Despite the housing-market gloom, Zillow reported a double-digit percentage jump in revenue in its most recent quarter. Its stock is up more than 60 percent over the past year.

The company makes money primarily, for now, by selling ads and leads to brokers, agents and others trying to reach the home buyers browsing its listings. It is trying to shift to what it calls a super app that connects users to providers of mortgages, rentals and other housing-related services.

Some competitors are wary of the way Zillow works. Zillow said recently that any home put on the market also must be listed on Zillow within 24 hours, or the listing would never be allowed on the site.

This practice is at the center of a lawsuit filed in June by Compass, the real estate brokerage, which claims that Zillow conspired to maintain a monopoly over digital home listings. Compass calls it the “Zillow ban.” Mr. Wacksman said the company will “vigorously” defend itself and, ever the marketer, that Zillow’s focus is on what’s best for its customers.

This interview was conducted virtually, with Mr. Wacksman at Zillow’s home base in Seattle. It was edited and condensed for clarity.

We all know and love and use Zillow to browse and dream and shop and gawk, right?

Then, once you want to actually go rent or buy or sell, you go into this still very broken, very analog process that feels very different than every app on your phone. If you’re going to hail an Uber, to book an Airbnb, to order food, it’s a one-click delight.

That doesn’t exist in real estate. Half of all buyers say they cry during the process of trying to buy a home. That is the opposite of delightful.

When we talk about a “super app,” it’s about trying to build a set of software and tools and connect you with the people you’re going to need to get the buying and selling done. So, it can feel more like what you expect a modern app to feel like.

How can buyers feel confident that Zillow has their best interests in mind when its business model relies on revenue from the agent side?

We used to be an advertising business. We are shifting to a transaction business, which means we only get paid if you buy and sell a house and you use our partner services, and we all work together. We only get paid when our agents get paid, and our agents get paid when the customer buys and sells the house successfully.

Compass has sued Zillow over the 24-hour listing rule. What do you say to critics who call it the Zillow ban?

I can’t comment on the lawsuit other than to say we believe the claims in the lawsuit are unfounded and we intend to vigorously defend against them.

But to step back, the heart of the issue is the U.S. real estate market currently exists with a unique amount of transparency. So you and I, as a buyer and seller, can see all available listings, and that empowers us to shop on our own. There are a few companies that are looking to put the internet back in a box and hide inventory and force you to pay them.

The lawsuit is about challenging that consumer benefit and that transparency.

Some say Zillow hurts sellers because it limits how they are able to market their properties. What if people don’t want to market their homes widely at first?

The reality is with private listings, sellers lose money. Sellers who sold privately left more than a billion dollars on the table in ’23 and ’24.

The great news is the majority of buyers want to be able to see all inventory, and the vast majority of sellers want their home broadly marketed.

How, as a user, can you be sure that you’re not being driven to an agent who isn’t as knowledgeable about a house or a neighborhood?

You can go meet them, tour a home with them and then sign an agreement if you like working with them.

And what’s in it for sellers?

When you’re a seller, hiring the right agent is the most important thing you can do, and then making sure that agent markets your home in the broadest sense to buyers. That’s why we spend so much time on the software to help agents do their job well.

Is that software like Zillow Showcase, which shows 3-D walk-throughs?

Zillow Showcase is, in many ways, a super listing. Buyers spend twice as much time with them because you can virtually tour the home from your phone before you go drive there. You can walk through the house. You can orient yourself on a floor plan to see the photos. Unsurprisingly, the homes sell faster.

Is that underpinned by A.I.?

Showcase is powered by a lot of machine learning and computer vision A.I. We were working on this before the gen A.I. explosion came. We take real estate photographers’ photos and panoramas and we can generate a floor plan. We can generate the walk-through. Now, with all the generative A.I. capabilities, we’re able to improve that even further.

Does generative A.I. make the pricing estimates — the Zestimates — more accurate?

We have been using technology to improve the Zestimate for the 19 years that we’ve been in existence. Gen A.I. will continue to help us do that.

Do people complain to you about the estimates for their house?

It is a very common question: Can you change my assessment? And the answer is: No, I cannot.

A lot of people think we are in a housing crisis, but there is a lot of debate about why. What do you think is the main cause?

We have an affordability crisis, which is driven by an availability crisis. It is a supply-side problem.

Mortgage rates are higher, but that’s the small part of the problem. The real problem for a home buyer is home prices are up 30, 50, 70, 100 percent, depending on the market, from prepandemic levels. Incomes are not up that much.

We have been chronically under-building since, really, the global financial crisis. Less supply and a lot of demand is going to keep home prices elevated.

Visits to your site are growing. Is it a recession indicator to have more people surfing on Zillow but fewer people actually buying homes?

No, not really. “Zillow Surfing” is pretty pervasive, regardless of if it’s a buyer’s market or a seller’s market. You spend all this time window shopping and escaping and dreaming. You are getting a little smarter about what you might want, and then something happens and you pull the trigger.

As a marketer, I don’t think you could have a stronger brand endorsement than all of the usage you get from people escaping on your platform. It’s what gives rise to a “Saturday Night Live” sketch, right?

Let’s talk about how you got here. You’re from Cincinnati. What did your parents do?

My dad was a surgeon. My mom was a stay-at-home mom. She’d been a teacher before she had kids. She passed when I was young, so my dad remarried and my stepmom was a nurse. I grew up as a son of a medical family.

Did you ever think that could be your path?

No, early on I got a little bit of exposure to that and very quickly learned it was not for me. I grew up in the Space Camp era. I wanted to be an astronaut.

What sparked your interest in technology?

In high school, we got one of our first internet-enabled PCs and I remember my dad saying to me, “I don’t know what you should do, but you should probably work with computers.” Turned out to be sage life advice. I decided to study computer engineering. I thought I was going to be a software developer.

Why join a housing company in 2009?

You ask that now and my family asked that at the time. The answer is really simple: It’s the team.

It was a team of consumer-obsessed founders that had a track record of building software and building companies to empower users, buyers and sellers.

I wanted to work with that group. And I knew we’d figure it out. I was an engineer-turned-marketer so I could wear multiple hats.

What was the biggest adjustment you had to make when you became C.E.O.?

The biggest change, honestly, is external. In my new job, I spend more time meeting with industry partners, customers and potential customers and partners than I did in the operating job, which has been a fantastic area of growth for me in my first year.

What have you learned about yourself?

I always knew I was an introvert. I’m getting better at managing the energy drain that comes from more external relations, and just making sure I create the right time and space to do it well.

It’s time for the lightning round. It’s mostly about housing. When did you buy your first house?

My early 20s.

I assume you surf Zillow a lot. Have anything interesting saved?

A lot of times it’s sunny southern markets during the winter in Seattle.

What is the craziest thing you’ve seen on Zillow?

There was a missile silo for sale.

What’s your favorite room in the house when scrolling through photos?

The kitchen, because we’re going to spend a lot of time there. If it’s not right, it’s really expensive to fix.

I’ve been watching a lot of “House Hunters.” What’s your favorite show about housing?

“Zillow Gone Wild.” That’s an easy one.

What have you learned from your youngest employees?

They are some of the best folks at all the changes coming from A.I. I’m spending a ton of time on A.I. and trying to learn from everywhere. I’m learning from my kids, too. A.I. is coming so quickly. We all have to be sponges.

What’s the last thing you asked A.I.?

I asked A.I. to get me ready for my interview with you.

Oh my gosh.

I said you were interviewing me and here’s who you are. What questions are you going to ask and what should I be ready to talk about? It gave me great questions and content.

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