Zillow’s CEO on growing the company during a housing crisis

Today, I’m talking with Zillow CEO Jeremy Wacksman.

Zillow is one of those apps that really exemplifies what you might call the smartphone era of software: the company built a great mobile app for looking at real estate listings, and it turned into not just entertainment for so many of us, but what has become a vertically integrated platform for buying, selling, and renting real estate.

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If you’ve been listening to Decoder lately, you’ve maybe already guessed why I was so eager to talk with Jeremy — a popular mobile app like that is really the front-end to a big series of databases, and the politics of who gets access to databases and how much that access should cost is newly up for grabs if you think the next era of software will be defined by AI. After all, you don’t need an app like Zillow if your AI agent can just go look at the multiple listing service, or MLS, database directly.

Or maybe you do — maybe you need an app like Zillow more than ever, which is of course the case Jeremy made in this conversation. And the politics of Zillow’s database access are as complicated as it gets — the company is involved in big lawsuits over when and how houses get listed in MLS versus Zillow, and realtor groups have an uneasy relationship with the platform as a whole. Jeremy’s argument is that the future of Zillow looks a lot like an end-to-end business platform for real estate agents, and we spent a lot of time talking about whether a business as local and as relationship-driven as real estate can benefit from platform-level scale in the way he’s proposing.

Yeah, there’s a lot of Decoder in this one — it’s going to surprise you, I think.

Okay: Zillow CEO Jeremy Wacksman. Here we go.

This interview has been lightly edited for length and clarity.

Jeremy Wacksman, you’re the CEO of the Zillow Group. Welcome to Decoder.

Thanks for having me. Happy to be here.

I’m excited to be in person. I love doing these episodes in person. Thank you so much for coming to our office here in New York.

We’re here for the week. Zillow’s 20th anniversary was yesterday; we’re celebrating it today. So it worked out really well to be in person. I’m excited to do it.

It’s always a little looser when we’re in person, so I’m excited to do it. I’m excited for this episode. Zillow is one of those tech companies, there are platform dynamics, there’s a lot to talk about. My favorite Decoder episodes are the ones where you point out that a database is very complicated and full of political machinations and big economic regulatory disputes. And there is no more complicated database than the databases of houses that are for sale in America.

I think that’s well said.

And so I’m dying to just dive into that. I think most people understand Zillow is the app where you judge other people’s taste in interior design. Especially in 2026 America, it feels like its primary purpose.

Entertainment on Zillow has been a growing phenomenon since I’ve been there. Absolutely.

You’ve been there since 2009, I want to say?

2009, 16 years.

16 years. And you only just became the CEO, I think last year or year before?

Yeah, about a year and a half ago. August 2024.

That shift from, “Hey, we can put all the houses for sale in your area on your phone and you can just see what’s happening,” to, “Oh, we’re going to transact a lot.” At one point, I think Zillow was buying lots of houses. So now you’re the CEO and the whole market has changed. Describe the arc of Zillow briefly for people, what the app was, what the company is now, what you wanted to be as CEO.

Zillow started 20 years ago today as we’re recording this. And it was founded on the principle that real estate information wasn’t available to the average buyer and seller. So our co-founders, Rich Barton and Lloyd Frank had come off of Expedia. They had built a bunch of marketplaces. They looked at real estate. They were shopping themselves and they said, “Wait, I can’t find out what homes are for sale or what houses are worth. The data is locked in a professional’s database and I have to go pay for access.” And so that was the founding inspiration: “Let’s turn on the lights. Let’s give people access to information.” The other categories on the internet by then had gone that way. You could start to get access to travel and all the other verticals, but real estate really hadn’t come to the internet circa the mid 2000s.

We launched in February 2006 with the Zestimate. That was our launching product. And that was just trying to answer one question: just what are homes worth? Not a perfect answer, but an estimate of, okay, take some comps and build a machine learning model to figure out what these houses might be worth to help you be smarter when you start to shop. And Zillow grew out of that into an advertising business. The first decade plus, it was just a classic ads marketplace. It was, okay, let’s offer great products to buyers and sellers. They come and use it. They dream, but they also shop and they buy. And advertisers, professionals are going to want access to that audience. So we’ll just sell access to the audience and sell leads and sell advertising. 10, 11 years in, we had built this great brand.

We were very proud that Zillow was searched more than “real estate” on Google. We have become a category term. People love the brand. The cocktail party story was always, “Wow, can you change my Zestimate?” Or, “How do you do that?” But we’re customer obsessed and we would ask customers how it was going and they’re like, “I love using Zillow.” Then what? “I cried when I bought my house.” And the data point I always remember was we surveyed the average home buyer. We do this every year now as a housing trends report and percentages and demographics and trends. And one of the things that stuck out back then was that more than half of buyers cried during the process. We’re like, “That’s not great. We’re the preeminent brand in the category. We’re helping people with the start, but the rest of it’s still broken.” So we shifted and pivoted the business to be more transaction focused.

And we obviously still have ads as a part of the business model, but what we’ve been focused on for a while now is actually building the software to help the buyer, the renter, and the seller transact. Not just find the agent, but coordinate and collaborate with the agent, the software for the agent to help you buy and sell the house, the software for the agent to help you list the house, the services for you to get the loan from us, the software for you to coordinate all that together. And we measure our growth and our success now as the amount of transactions that we actually participate in with the buyer and the seller.

That’s been the journey we’ve been on. We’re not done. Like you said, there’s no more complex database than the real estate one. That’s what makes building this integrated experience so hard: you have to coordinate so many things, which we can talk about. But that’s really the history of Zillow. And it’s fascinating because we’re celebrating a 20-year anniversary and the brand has come so far, but the goal of building a one-stop shop for real estate, we’re really just getting started.

I want to come to measuring transactions, especially in our current real estate market where it seems like transactions are just going to stay low for a while. That initial piece of Zillow, where it’s going to just show you what houses are available, how much they transacted for. That is just a public database. This is just a thing that happens in your area and you can have access to that database. And I would say, broadly, during the early internet and particularly early mobile, the innovation was often just exposing the database to people, packaging it up, making it pretty, saying, “Here’s some information that’s available to you that certainly now on your phone.” I’m at a restaurant, in some town I’m visiting, I can just see what the houses are worth.

Or you’re walking the beach and you can say, “Wow, I want to move here! What’s that house worth?”

That’s a big public database that created a lot of value for Zillow, created a lot of value for Zillow’s users. Over time, it seems like Zillow wants to have its own database. And the one that’s right next to it, that’s important. Over time, as you want to take control of more of that transaction journey, you need control over many, many more amounts of data through the process. Right next to that is the real estate industry in the United States, which has the National Association of Realtors. They’ve been in some regulatory issues that I want to talk to you about, but they maintain the multiple listing service, where it’s tempting to think of that as one database, but it’s actually like hundreds of databases.

Over 500.

Maintained by little groups of regional realtors all doing their thing.

That’s right. That’s right.

What’s your relationship with that? Because that feels like the most contentious back and forth of this all.

It’s a great question. From the outside, you would assume it’s contentious because we’re the innovator, we came in, we’re the technologists, but the reality is we love the MLSs. They are the marketplace. We have this real estate database, that is the MLSs and it’s available to everyone. Whenever I talk to people about our industry and they don’t work in our industry, what they are surprised to learn is that the listings that are for sale are broadly shared by every person in the real estate market to everyone else. So the listings that are on Zillow, the listings that are on realtor.com, that are on our competitor websites, we all have the same listings. There’s no differentiation of what’s for sale. And what that means is it’s an incredible public good. Buyers and sellers, big brokerages, startups, and innovators can all get access to the same information because the real estate industry has agreed to cooperate and share it.

We’re the only country in the world that works this way. Every other country, they are private databases. They are somewhat controlled. That creates less competition, that creates less transparency, and it actually creates a worse consumer experience. So we have grown up and the internet coming to real estate actually allowed the MLSs to build this so that it’s commoditized. Zillow then has to differentiate on top of that. We have to fiercely compete for an audience and win that audience with better products on top of commodity data. Many marketplaces, you build content other people don’t have and you have this lock-in benefit. We don’t have that. We have to build better touring experiences. We have to build better AI-powered virtual touring. We have to build better financing. We have to attract buyers and sellers to want to use our services because one click away is the same listings on another website.

Do you think if I went and asked the National Association of Realtors or any of these small realtor groups that maintain these databases, if they think their product is a public good, that they would think it’s a public good?

I think many MLSs would say that.

The transaction data is definitely a public good. That’s literally public information.

Well, the transaction data is actual county public records that you get.

The MLS is a bunch of realtors who’ve all decided to share their listings together in very specific ways. They have their own agreements. There’s stuff in those databases that I can’t see as a member of the public.

That’s right.

When you described it as a public good—I’m pushing on this for a reason—they maintain control of it and there is friction in that relationship.

Yeah, that’s right.

How do you think they see their relationship to you?

I think many see it as complementary. I think the challenge is there’s 500 plus groups. So we can’t have one conversation. There are many MLSs that are very consumer focused and most of their rules, as you put it, are consumer friendly because they want to support broad membership. Their interests are, “How can we have more members? How can we have more folks come and use our service?” So there’s some that are more industry focused and we would actually take issue with some of their rules, and we do. We’re allowed when we think they have anti-consumer rules.

But I guess to answer your question, on balance, if we did not have a shared cooperative database and we went and signed up and got all the listings—which, by the way, we did before all this. We did not get our listings from the MLS until six or seven years ago. We still had most of all the listings on Zillow because people want to put their listings on Zillow. It was just way less efficient to get it that way. You’re talking about tens and thousands of feeds and relationships and changes and all the things. So on balance, the idea that the database is coordinated and broadly available is 80%-90% good, and there’s 10%-20% friction and rules that we don’t love that we work hard to lobby and advocate and change for.

One of the themes on Decoder that comes up over and over again is obviously aggregation theory, where on the internet, particularly people that have the consumer demand get to set a lot of the terms. Google is maybe the ultimate aggregator. There’s just incredible demand for whatever’s on Google and then Google gets to set a lot of terms for suppliers. There are many, many other examples of this. Credits to Ben Thompson who came up with aggregation theory. Zillow is one of those aggregators. And so even in the case where there was another database of information, you’re saying the real estate agents knew that the audience was on Zillow, so they should put their listings on Zillow as well. At what point did you realize that you had the ability to go say to the MLS providers, “Hey, this is way more efficient.” Because at some point they didn’t think that was efficient. When did you realize it would be more efficient or when did they realize it’d be more efficient to connect directly?

I don’t have the history perfectly, but the internet broadly helped them evolve that way. There’s a standard that they created that I’m sure if we go back, back to when Zillow was founded, it wasn’t available where brokerages, the real estate industry, the MLSs could make available a feed for any internet site or any internet brokerage based site to display. That came about as the internet was coming, as sites like Zillow were coming. They reacted to that. In a pro-competitive and pro-consumer way, it probably happened over the last 10, 15 years. The other part of Zillow’s history is we didn’t start that way. Because back then, there wasn’t this internet-powered set of MLS rules. They were before the internet. They hadn’t thought about this. So we had to go sign up and get all these things on our own and we did that and we built these great brands and consumer experiences and then I think the industry caught up.

The reason I’m asking all these questions is, one, I think the politics of databases are fascinating and in particular, who gets to connect what, who creates the data and populates the database and who gets to display the data in the database. In the age of AI it is actually more up for grabs maybe than ever before. The idea that you have an interface as opposed to a chatbot that’s directly reading your database—we’re going to come to that, but I see all these politics as upper grabs. The other reason is I wanted to set up the Decoder questions here. You had a business that was, “Hey, there are a bunch of public or semi-public databases that we can access to.” And your job, as you’ve described it, is to build the best product on top of those databases and to say, “Here’s the listings, here’s the best tour, here’s the best photo viewer.”

And I don’t mean this to sound reductive, but that is like, “We’re going to make a great mobile app. We’re going to have the fastest photo viewer and worry about caching images, where they are and all that stuff you’re going to do. We’re going to have the best 3D tours.” The things you’re describing now are real estate transactions. It’s not just pure software design on top of databases. It’s going to actually go and address the business logic that someone is having when they’re looking at a listing. That seems like you would have to change the company pretty dramatically. So tell me how the company was structured before you became CEO, and then this is the Decoder question: How is Zillow structured now?

I’ll answer both those questions. The company structure pre- and post- my taking over CEO didn’t change too dramatically, mostly because the CEO transition was pretty planned. I was COO before and we really planned for succession. We started organizing the company back then. The question probably is better [framed] as, “How did we set up the company at that stage?” And that’s largely how it’s structured now. We are—I’m sure you get this a lot—we’re a classic matrix. We have functional teams and functional expertise that then sits alongside business groups for our most mature businesses. Great product marketing, engineering, and design teams that are fully integrated with dedicated leaders that matrix into the business team and most of our mature businesses are run in one group. That’s most of Zillow.

What are your mature businesses?

Most of our for-sale business is how we think about it. We think about for-sales and rentals. Most of the buyers and sellers that are using the Zillow brand that you see, and most of the agents that are talking to them and most of the loans and home loans that you’re getting in our residential real estate, is the most mature part. And I don’t say “mature” in terms of market share and growth, but in terms of how long we’ve been at this. We also have startups, acquired businesses, smaller businesses that we intentionally run more independently for some period of time until we need to think about how to better integrate them. Rentals are a great example. We have a rentals marketplace that’s now north of 20% of our company, but that was largely a startup inside of Zillow for a long time and it operated and still operates relatively independently with a GM of rentals and had a lot of its functional teams fully owned.

As it’s matured, now it’s going to be our next billion-dollar business. That’s one of our goals, is we are starting to intentionally think about, okay, well, how do we fold some of that back into the functional expertise capabilities? StreetEasy here in New York, which I know you all know well, that was something we acquired and maintained its independence and have continued to maintain its independence because there’s not a lot of value and there’s actually a lot of more value in keeping it independent and thinking about New York because it’s such a unique market. We don’t have a one-size-fits-all, but broadly speaking, we have a functional business matrix that we look at. Does it make sense for the next thing we’re doing?

As you’ve evolved, there have been periods of growth in Zillow, there have been periods of layoffs. Again, one of the boldest attempts that will make home buying easier was Zillow would just own all the homes. That did not go well. How big is Zillow now?

We are approximately—don’t get my account exactly right—approximately 7,000 people.

And how’s that organized? Or how’s that distributed?

We think about it as [both] fixed and variable headcount. “Fixed” is largely product engineering, marketing, design, and shared services, and then “variable” is sales, operations, support, and things that grow with revenue. So loan officers, rental sales, account managers in our agent business, those kinds of things. And it’s, loosely speaking, about half-and-half.

And are you mostly invested in product stuff or are you all account executives? How does that work?

Product and engineering is probably the largest group. We are first and foremost technology innovators, and that’s where we got our start. As we talked about earlier, yes, the business model’s evolved, but building the best products and services—even if that’s becoming software for the real estate agent, or if that’s becoming software for loan officers—is still how we get to our end goal of more transactions. That’s still the largest investment we have. But as the businesses are growing, staffing more loan officers, staffing more account managers to work with agents, that is variable growth that comes as we see more share come [in]. So those are growing as well. And those are probably on a percentage basis growing more, even if on a dollar basis, that’s still a smaller part of the company.

The other question I ask everybody who comes on Decoder is about decisions. How do you make decisions as CEO? What’s your framework?

I’m a big believer in “Find the truth, don’t find the right answer.” There was a famous quote that I’ll get wrong that was like, humans are naturally biased to want to be right, and sometimes they want to make the argument versus actually seeking the truth in the data. So our version of customer-obsessed is we’re looking for the answer from the buyer or the seller or from the agent using the software. And ideally the data helps us make sure we don’t have biases or we rechallenge assumptions. We push for data where we can get it and data to make decisions. That doesn’t mean we wait for data. Sometimes you have to make a gut decision, but often we want to be as data informed as we can.

Let me ask you about a big recent decision that’s somewhat controversial. We’re talking about databases. And one of the rules that Zillow has is if a property goes for sale, it has to be on Zillow within 24 hours or it’s not going to be on Zillow at all. Explain that decision. There’s a lot of controversy. There’s a lawsuit next to this decision. Explain that decision. You’re like, “This is the policy and it’s going to lead to some controversy.” How did you decide, “Okay, we’re going to hold to it?”

That policy is really about protecting transparency. Back to your earlier question, we all benefit—Zillow and our competitors—from these MLSs having most all available listings for free. For free for us, but [also] free for the agents who work and free for the buyers and sellers to use any site. There are companies in the space that want to take those listings off the internet and hide them for themselves and not put them as part of the database. We don’t think that’s a good thing. If you look at the other real estate markets in the world, that’s how they work. Private databases where you have to pay for access leads to consumers having to pay more. We think that’s a bad idea.

What we can do as an audience in the industry is say, “We don’t think you should be able to free ride and only give the internet the listings that you want and still get access to everyone else’s listing. So we won’t let you do that on Zillow. If you want to do that, then that’s fine. You can operate that way, but we don’t want to have that listing.” It was more of an educational tool so that people understood there was a trade-off if they did that. And ideally in a sense, what we already see, is that the majority of sellers and sellers agents, if given a choice, want their listing on the internet and want their listing on as many internet sites as possible, and that’s what they’d choose.

The company you’re talking about is Compass, which is a reasonably high-end real estate firm. They have a bunch of software of their own. They will happily tell you that they’re a tech company. You’re obviously in a lawsuit with them. In every other business I can think of, there is some windowing. Netflix and TV is a great example of this. The movie comes out in theaters, Ted Sarandos has to promise Congress he’s going to maintain a 45-day theatrical window. He’s going to buy Warner Brothers. Then it goes to, I don’t know, it goes to HBO and then to Netflix and then to the Delta seat back, and every one of those is a different payment. And you can see windowing happens across different businesses. Why do you think windowing is inappropriate in the real estate market?

I think you should think about real estate more as e-commerce than as premium content. When you’re selling a good, you want to advertise to as much demand as possible, as quickly as possible. The number one thing, the reason people cry is because it’s so hard to buy and sell and it takes weeks and sometimes months to do it and you have people traipsing through your house and you basically have to hire someone as a part-time job on your behalf to help coordinate all this stuff. So the idea that you wouldn’t try and maximize price when we ask sellers, most people say, “No, no, no. I want to sell my house for the most that I can in as short a time as possible.” So that doesn’t really fit with trying to window or hold things out or take longer.

For us, the goal would be to help sellers do that, to help sellers understand that if you want to maximize price, the way to do that is to broadly market your home as quickly as possible. If you don’t, and there are rare cases where people don’t, you can do that. You can sell your home privately, you can opt your home out of the internet because you have privacy concerns. All those mechanisms exist today, and we support all those things. We’re not saying you can’t do that. You can window. You just can’t window by only showing your home to some people and then forcing those people to go work with certain companies over other companies because the toll on all those customers is going to go up.

Wait, how can you window if you can’t ever get on Zillow unless you list within 24 hours? I think this is a thing that I don’t quite understand.

Got it. The only thing we take issue with is selective marketing. There are plenty of ways for you to be private or sell your home in a private fashion today. You can never put your home in the MLS and you can sell it off market. And that happens in privacy situations or luxury situations. You can put your home in the MLS and opt out of the internet because you actually don’t want people traipsing around, driving around your street. You can hide the address if you have privacy concerns. You can take all these steps today. And then of course you can put your home on the MLS and it comes to all the sites. You can also list your home as coming soon in the MLS and say, “I’m actually not ready to sell. I have to do a whole bunch of work, but I’m going to be selling my home when the spring selling season comes, so I should start to tell people about it.”

That’s a version of windowing. The common theme across all those is that a company is not choosing which customers can get access to this stuff and making it broadly available for some, but not for others, which can lead to all kinds of bad behavior. And you’re not telling the seller that by doing so, you’re going to get even more money. If you’re going to forgo some demand, that you’ll somehow increase the price. That’s the only thing we say, “If you want to do that, we don’t want those listings.”

The reason I’m pushing here is—I think I understand a broad dynamic in this industry, which was that there was a pretty big settlement in a lawsuit about realtor fees and broker fees, and now those fees are up for negotiation. And so you can see the big agencies are actually trying to close their little markets. They have a lot of listings and if they can just sell in between themselves, they can pre-negotiate those fees. You can disagree with that reaction, but it’s a rational economic reaction to go, “Okay, we’re not going to negotiate broker fees the way we were. We’re just going to create a little closed ecosystem.”

That’s right up against you saying, “Actually, the ecosystem has to be maximally transparent,” because you’re not actually doing the listings. You’re not the seller’s agent in many cases, you’re not the buyer’s agent in many cases. I know that there’s some amount of referral there. So they’re trying to protect their cost of actually managing the inventory. How do you reconcile that? If that industry was destabilized by a legal settlement and they’re trying to find a new equilibrium and you’re saying, “Actually, we’re not going to let you make changes,” how do you reconcile that?

We reconcile it by what’s best for the seller. If we asked 90% of sellers, “Do you want to do something different?” And they said [yes], we’d go work on that. But you ask sellers, “Do you want to broadly market your home? Do you want to sell faster and for more money by public marketing?” They say yes. By the way, agents do too. That’s part of the other nuance of this industry that folks don’t quite get: a lot of these industry imaginations are between the brokers and the MLSs and the associations and NAR and all the legal work.

The industry is actually run by over a million independently licensed real estate professionals who are independent contractors. They inherit a lot of benefits from the companies they affiliate with, but they make their own decisions. They are fiduciaries in many cases, and they are supposed to disclose the benefits and risks of how you sell your goods to your buyer and seller. So that’s what we’re trying to help support. But you’re right. It is not surprising that companies want to find a way to find more margin, maybe at the expense of their end buyer and seller if they’re finding their margin challenged.

I’m reminded of a quote we get often from the various Amazon-adjacent executives who come on the show, that other people’s margin is their opportunity. Is that how you see it as you think about expanding the business?

No, only in as much as the agent’s margin is not really high, the end agent environment. We think about it like this: there are a lot of people in the middle of this real estate, and when you go back to the real estate database, there are a lot of folks in organized real estate. Zillow is very, very focused on the buyer and seller, but we’re also very, very focused on the individual agent at the end of the chain because those are the folks actually producing. And that is what’s led us into building a bunch of software for them and building a bunch of data and workflows for them.

Even though they work at tens of thousands of these brokerages and across tens of thousands of these markets, we don’t really think about the companies they affiliate with as much as we think about their end agents. And those folks are all basically small business entrepreneurs. They are running their own business. They aren’t getting a lot of business support from the inherited entities. We’re trying to help them run their business better. That’s how we help them help buyers and sellers sell more homes, and then more transactions are better for us.

One thing that’s interesting to me, and I’m sure you’ve thought about this, you’ve mentioned the seller a lot, like maximizing the value to the seller, which I think very, again, reductively means the prices are high, but the prices in the home market are staggeringly high right now, just across the board.

That’s right.

And I’m guessing that a bunch of people listening to this episode are going to say, “Well, I’m a buyer. I would love to buy a home. The prices are high. Who’s pushing the prices down? Who’s maximizing my value as a buyer?” Do you think about that side of the equation?

Absolutely. Yeah. We got into Zillow because we talked about listings and databases, but most all marketplaces start from demand and Zillow is mostly focused on the demand side and helping buyers. We are absolutely in an affordability crisis in this real estate market. That’s why, as you mentioned earlier, we are seeing such a depressed volume of transactions, because it is so hard to buy. That’s a combination of, yes, mortgage rates. Everyone loves to talk about mortgage rates; pre-pandemic, they were really low, and now they’ve run up. Although ironically, they’re still not nearly as high as they have been in historical times. The challenge though is home prices.

As you said, home prices are up nearly 100% in many markets from pre-pandemic levels, and that’s not sustainable and incomes aren’t rising that fast. So trying to ease that supply-demand and balance in the real estate market is really the only way to get back to a more normalized housing market. The way I always like to describe it is that in any given year over the last three, four decades, about six million homes would trade on average, five and a half to six million homes. So that’s 10, 12 million people are going through this part-time job process of moving. The last couple of years, it’s been 4 million homes. So we’re 2 million off a normalized market and it’s not really budging and affordability is the reason.

When you say affordability, I know you started by saying mortgage rates, everyone wants to talk about them. I have any number of friends who have pandemic-level 2% mortgages. They have no incentive to sell their house. They’re just not going to do it until… Maybe never. I don’t think they’re ever going to get another 2% mortgage.

No, but they may get more comfortable with a 5% mortgage. If you asked them three years ago, “What rate would you have to see?” They would say, “Three.” Now, three or four years go by and there are reasons people want to move that they’ve been putting off and now they might say, “Four,” or at some point they’ll say “Five.” So the pent-up demand and rates easing will eventually converge and you’ll start to see folks get unstuck from their mortgage more often.

Do you see the amount of building that you would need to see to address this directly from the supply side?

No. I’m glad you asked that question because that is… We get asked about rates so often on the demand side, but the affordability crisis is an availability problem and that’s the problem. The US, Zillow estimates. is nearly 5 million homes underbuilt. We’re just coming out of the global financial crisis back in 2008, 2009, which many folks listening would remember. We’d stopped building enough houses. It’s to keep up with new household formation and we definitely stopped building affordable homes. And so we have this accumulated deficit of supply.

That was a problem. That has been a problem that is now exacerbated by the mortgage rate lock you talked about. You need more new construction to help balance the market, but you also need existing home sales to come on and folks to say, “Well, I will trade out of my 2%-3% mortgage because I need to or because rates have come down or because enough time has gone by.” So you need both those things, but it is a supply problem. There are places in the country that are starting to make progress, but it’s very marginal progress and we have a long way to go.

You were mentioning that the key metric for the company is transactions, the number of transactions that you facilitated. How do you measure that accurately or well in a market that’s as frozen as the one you’re describing? Because it seems like it’s just a percentage of a number that is flat.

Having a small percentage of a number that is flat allows Zillow to grow and gain share even when the market is depressed. That’s a short version of how we think about it internally. Despite being a brand that is so well known and 60%-70% of all home buyers are on Zillow in any given month or quarter, our transaction share—as best we can measure it, and there are ways we have more so than others—is in single digits. The number of times a buyer and seller moves from using us as a shopping and dreaming site to hiring one of our agents, using one of our loan officers, using the software to help sell and list their home, and then we participate with the agent, that’s single digit. You’re right, while the housing market has contracted from the pandemic, Zillow’s share has grown. And that’s why our revenue and our business is able to grow in a flat housing market.

So you’re just taking more dollars out of a fixed pie?

And more transaction volume. We’re taking more share of transactions because we’re able to grow. You grow from five, six, seven on a percentage. 7% of four is still going to be a lot more than 3% of six.

Yes, that’s right. Okay. Well, you mentioned all the other software building. The software for the agents, the software to get the loans. Those are places where there are other companies with existing big margins, particularly loans. I always think about how I can tell when there’s excess margin in a market and it’s when I experience Glengarry Glen Ross on the other side of the phone. I whisper to the internet that I might want a mortgage and 500 companies show up at my doorstep. That means there’s enough money to do all that marketing to support all that lead generation, lead conversion. That does seem like an opportunity for you. You have the interface, you have the demand. “We’re just going to show you the rates, you’re going to pick a mortgage.” 

Have all of those companies been willing to participate in that system? Because that would reduce their margin.

That’s a place where we are competing more directly because now we actually originate mortgages. That’s also part of that transaction journey we talked about. In the first chapter of Zillow, we were just an ads marketplace for mortgages too. And a lot of people came to Zillow and said, “I need financing.” And we said, “Great. There are a bunch of mortgage providers that will advertise to you and go work with one of them.” Then all the advertising inefficiencies that you talked about happen. We now are actually in the loan origination business and we more and more are originating mortgages ourselves. And you are right, we have a customer acquisition cost advantage there because we already have the shoppers on Zillow. There’s also a customer benefit there. Again, we’re back to asking the buyers what they want. What they don’t want is to be aggressively marketed to. They also don’t want to have to hire a bunch of different companies to do pieces of the transaction and have no idea where they all are and have 37 Gmail threads and text messages about all the pieces.

They want to be able to open an app and go, “Okay, here are my conversations with my agent, here’s my offer, here’s my financing, here’s my closing. I just want to see it all there.” That’s what we’re trying to build. You have to originate the mortgage yourself, really, to do that. In that case, we are competing more directly. We are an incredibly small mortgage originator. Mortgage is a massive category. We are basis points of share, but the growth for Zillow is going to come from offering that more often because when a buyer comes to Zillow, they’re asking two questions. They’re saying, “Can I afford it and is there anything I want to buy?” And then in asking those two questions, they realize, “Oh, I need a professional.” One of those two things leads them to hire an agent and we’re trying to offer answers to those questions all in one place. That gives us this tremendous customer acquisition cost advantage to offer mortgages as one of the things they could choose.

I’m just thinking about when we bought our house. Our agent, our buyer’s agent—this is before the settlement. So the seller was going to pay my buyer’s agent’s fees. This very nice woman showed up and she just helped us buy a house and I paid her no money because the seller paid the fee for her to do everything. And she was very local to where we live and she knew all the local mortgage brokers, she knew all the local attorneys. And I was like, “This is great.” I’m just going to call Pam. “She’s going to do it.” And she just did it. Can Zillow offer that kind of experience when there’s no guarantee that it will get a fee the way that the buyer’s agents use to get a fee, or are you just going to collect fees at every step?

There are two questions there. Yes. I think part of that is, can we offer a mortgage service that your buyer’s agent would want? We think the answer to that question’s yes, because one, it’ll be more economical. It’ll be integrated into the software. If you hired Pam through Zillow, ideally she’s using a follow-up boss. That’s our customer relationship management software that many of the top agents use. So if you were to message her inside of Zillow, she’s messaging back from our software, your loan officer shows up in there, your pre-approval letter shows up in there. We win her business because we are efficient, we are priced competitively, but the most important thing, the reason that she recommended that person, if she’s doing her job right, is she just knew that the lender was going to close.

Buyer’s agents close a handful of transactions a year. If you ask them what they want, yes, they want to help their customers save money for sure, but they also want to make sure the deal doesn’t get wrecked. What we are doing is building a capability set that we’re taking to more and more agents to show them, yes, Zillow, even though we are a national brand, we have local expertise and we have loan officers everywhere that can help. And that’s the number one que