Can Zillow’s 'Super App' Fix a Broken Housing Market?

0:03Jeremy Wacksman:If you had one word to describe the current housing market, what would you choose?

0:10Tim Higgins:Depressed. And the reason for that, which we've read lots of headlines about, is affordability. High home prices, elevated mortgage rates, lack of supply. A lot fewer people than normal are moving in a given year.

0:23Jeremy Wacksman:This week on Bold Names, we're talking to Jeremy Wacksman. He's the CEO of Zillow. The real estate site has its finger on the pulse of the national real estate market. And as Jeremy just mentioned, there have been better days. So what should we expect this year? That's next. From the Wall Street Journal, I'm Tim Higgins. And this is Bold Names, where you'll hear from the leaders of the bold name companies featured in the Wall Street Journal. Today we ask, how is Zillow changing the way you hunt for your new home? Jeremy, thanks for joining Bold Names. I want to take this opportunity to take a temperature of the nation's real estate market.

1:05Jeremy Wacksman:Your data on Zillow.com, those buyers and sellers out there, gives you such a window into the state of the housing industry. What are your economists telling you about the housing market in 2026?

1:18Tim Higgins:Well, thanks for having me. I'm happy to be here. Our economists are saying that there'll be a little bit of improvement in 2026 versus last year, but we're still in a really challenged housing market.

1:30Jeremy Wacksman:When I talk to pollsters out there, they say affordability is one of the biggest issues that they hear from voters. We see it on all sorts of topics from health care and more importantly, probably housing. And I think, you know, Zillow is in an interesting spot in this, right? You get what, 250 million unique visitors to your website and app every month. A lot of people out there window shopping, dreaming. and I think they see those houses, those big prices, and it confirms really that they can't kind of grasp that American dream of homeownership. As you think about the affordability issues, what's driving it?

2:09Jeremy Wacksman:Why do we have this problem?

2:11Tim Higgins:You're right. We do have most of America on Zillow. Real estate's a hobby for many, right? The average person buys and sells a home less than once a decade. But hundreds of millions of folks are on Zillow, and they're shopping, and they're dreaming, and they're escaping. And it's a great pastime because you never know when you're going to find the right one. But what the data tells us is the big root cause of the affordability challenge is really an availability challenge. It is a lack of supply. Coming out of the global financial crisis back in 2008, 2009, we started building less homes than household formation.

2:47And we've

2:48Tim Higgins:accumulated this deficit of Zillow estimates, almost 5 million fewer homes have been built to keep up. And so anytime in a marketplace, when you have less supply than demand, it makes it more unaffordable for that demand. You pair, you marry that with mortgage rates that have elevated, and it makes it even more unaffordable.

3:08Jeremy Wacksman:So mortgage rates are higher, means your monthly payment is higher, you can afford less. And people out there, there aren't homes to buy. But people need to sell their homes. What's it like for them out there? Are they not finding buyers?

3:22Tim Higgins:So for a while, our economists would say it has been a seller's market just because of that lack of supply. But because of the affordability challenge, it has really shifted. And the story going into 2026 is really more of a local one. But markets are starting to turn. And what sellers are finding is the prices they thought they could get in many of these markets aren't what they can get in today's markets. It's easy to look in the rearview mirror at what a home sold for. And the market has moved. But the markets where you're seeing population growth and demand strong, that's still where you're seeing a strong seller's market, especially we're seeing listings be down.

3:59Tim Higgins:So markets with rising home prices, we just put out sort of best markets to buy in. And that's the flip side of that.

4:06Jeremy Wacksman:I mean, I think a seller right now, you want to be in San Francisco. I've talked to real estate agents who are seeing bidding wars. I heard from a real estate agent the other day, who was talking about a house being listed for 2 million, eventually sold for 4 million. If you're a buyer, sweating it out. Where do you want to be if you're a buyer? What are the where are the good markets?

4:23Tim Higgins:Yeah, the hot buyers markets are the markets that are kind of satellite to major cities, right? So think Hartford, Connecticut, those are the markets where home prices are still going up. But you contrast that to places like the Sunbelt, where they've built nicely over the last five or six years, taken Austin, Texas, take the southeast, you are seeing home prices come down, you're seeing rents come down. And so So it is more affordable for the buyer.

4:46Jeremy Wacksman:Yeah, Indianapolis, Atlanta, Charlotte lead the 10 top markets where buyers will see the friendliest conditions according to the list you guys put out. You know, it's interesting because sales are stuck at around a 30-year low. For those who do venture out and buy, the data would suggest they are getting some discounts in some of those areas according to a recent report by the Wall Street Journal. So it's weird. If you can afford to buy, maybe you can get a deal, but a lot of people can't afford to buy.

5:15Tim Higgins:Well, and that's the thing about the housing market. I mean, it will return to a growth industry over time. And we talk about how off it is from pre-pandemic, but there are still 4.1, 4.2 million homes trading. You know, that's millions of Americans moving in a given year. And those are the folks that have to move. There's a job change. There's a life event.

5:34Jeremy Wacksman:You're talking about this regionality of the market, which I think is one of the reasons why I go to your site so often. I see it as kind of a barometer of regional economies. There are several communities I follow throughout the US. I know very well, I keep tabs on them. So I'm always going to this neighborhood and that neighborhood on Zillow and seeing what's the inventory is like, what the prices are like. I guess that's the way I'm spending my free time. Do you have any insight into how long people are staying on your website?

6:00Tim Higgins:I mean, we see folks using the site for months and months before they pull the trigger. And then we actually see folks stick around after. I think that's one of the things that's counterintuitive is after you buy, you kind of look through your fingers to say, did I make the right decision? And you kind of obsess about the other transaction on the street that happened after you bought. And so we see that shopping pattern as well. But as you said at the beginning, the reality is, even if you're not in the transaction, it's so fun to think about what's out there, to understand more about your neighborhood, to look at where you might want to live someday, even when you're not in a transaction mindset.

6:38Jeremy Wacksman:So, I mean, this is the interesting thing about your site, right? You have, what, 250 million users on average each month coming in there, a ton of people. It's so powerful. But one of the perennial questions, of course, for you and your predecessors has always been, how do you turn that strong brand into profitability? Now we're talking days before your fourth core earnings. So I know you won't discuss those. You can't discuss those. But analysts are expecting that Zillow is going to finish 2025 profitably, the first annual net profit in more than a decade. Let's talk about the first nine months of 2025.

7:13Jeremy Wacksman:What drove this turnaround?

7:16Tim Higgins:Yeah, I mean, I'll start at the top. The strategy for Zillow is to turn more of that audience you talked about into transactions. We are incredibly fortunate that we have the majority of America is on our site, but only a small share of those folks when they buy or sell or rent. they use our transaction services. They connect to the agents that are advertising with us. They connect with the property managers that are on Zillow. They use our mortgage services. And our revenue growth comes from just helping a few more percentage of them use our services or find the professionals that they need from Zillow.

7:50Tim Higgins:And that's working really well over the last couple of years, both in rental and for sale. And that's why you're seeing Zillow put up double-digit revenue growth against this housing market we've talked about that's flat, right? The market is not helping Zillow grow. Zillow is growing its share of transactions in a flat housing market. And that's why you're seeing revenue growth. That's why you're seeing margin improvement and why you're seeing net income.

8:15Jeremy Wacksman:It seems to me that rental listings are something of a moat, right? It's not like real estate listings where there's the multiple listing services out there where you get the houses that are for sale in your community that you then put onto the website, But you got to have to sort of build that list for rentals.

8:30Tim Higgins:The rental market is very different than first sale market. As you said, there is no national database or even local databases of all rental listings. And that was really the problem we set out to solve when we got into rentals a while ago. A renter has an even more compressed time frame, right? The stress is even higher because you have to decide quickly, are you going to renew your lease? Are you going to move? Many renters are thinking, could they buy or not? And so Zillow set out to just help answer those questions. Well, to answer both those questions, you have to have rental listings and for sale listings and affordability tools, and you have to have as much of the inventory as possible.

9:04Tim Higgins:And so we built a platform for landlords and for property managers to provide all their listings to Zillow and slowly built what is now the largest database of all listings. No one site has them all, but Zillow's brand is now trusted by renters to have the most rental listings. And that's why we have the largest audience in rentals. And because we largely solved the problem of if you need to find a rental, increasingly you're going to find it on Zillow.

9:31Jeremy Wacksman:Just ahead, Jeremy explains why Zillow is building what he calls a super app for housing.

9:38Tim Higgins:We have this expectation when we pick up our phone and we open the app, you should be able to do everything in the app. And the app should help you with any question and get you all the way through the transaction. As you pointed out, real estate doesn't work that way yet. Yet.

9:53Jeremy Wacksman:Stay with us.

10:03Jeremy Wacksman:Another part of the routine of Zillow is mortgages, right? A number of years ago, you got into the mortgage business. What are the benefits of financing a home with Zillow compared to a traditional lender?

10:16Tim Higgins:Yeah, many folks don't know that Zillow originates mortgages and can offer you a mortgage. the reason we got into that business, the reason we do most things is to solve a consumer need, right? What a buyer needs when they go and buy a house is they need a great agent and they need a loan. And then they need software and tools to help them complete the transaction. And that's what we're trying to build. We're trying to build an integrated experience so that a buyer can find the home they want on Zillow, hire their professional, line up their financing, converse and message with their professionals all inside the Zillow app all the way to close.

10:52Tim Higgins:And so you can't really provide that integrated one-stop shop if you aren't providing the mortgage, right? They ideally want to be able to transact with that transparently, online, digitally, modern. And so that's what we're building is if you use our services, we can offer you something that's more seamless, that's more efficient, and that's more in your control.

11:11Jeremy Wacksman:Housing super app is what it sounds like.

11:14Tim Higgins:That's right.

11:15Jeremy Wacksman:That's the term you like to use. And everybody in tech likes to think about creating some sort of super app. I mean, you talk to Uber, as I do, they want to have the Uber app be everything that's about mobility and getting deliveries and all sorts of things.

11:27Tim Higgins:That's right. And you gave some other category examples. We have this expectation when we pick up our phone and we open the app, you should be able to do everything in the app. And the app should help you with any question and get you all the way through the transaction. As you pointed out, real estate doesn't work that way yet. Yet. Right. Because it's complicated.

11:45Jeremy Wacksman:That's what you're working on. It's complicated. One of the big complicating factors is the role that real estate agent plays. And I think we've talked about some of your businesses here, but the core part of Zillow's business is lead generators for real estate agents. This is the primary revenue driver has traditionally been, I think at one point it was something like 70%. It has come down now as you expanded the pie. It's a weird time to be in the real estate agent business, right? It's an industry that's reeling following that landmark legal sentiment around real estate agent commissions. It's been a major shakeup in the real estate world today.

12:22Jeremy Wacksman:The National Association of Realtors not only agreed to pay$418 million, but also agreed to eliminate the 6 % Realtor Commission. Yeah, this is a landmark antitrust settlement in the housing market that'll fundamentally change the way real estate agents are compensated when you buy or sell your home. What's your view on where you can play in this new world?

12:43Tim Higgins:Yeah, you're right. The first decade of Zillow, it was really lead generation, right? We would attract buyers and sellers, and an advertiser would pay to attract those customers. And as soon as we connected you, we were hands off. We were done. And what we learned after a decade was that was a great initial business, but it didn't actually solve the consumer problem of helping through the transaction. And so we actually shifted that business and it's now a revenue share. It's a partnership with those agents. So more and more of our agent revenue is no longer traditional upfront advertising. It's actually performance based, right?

13:20Tim Higgins:We only make money if the agent we connect you with ends up helping you transact, right? And then we share in that revenue together and aligning our interests with those agents has really helped us build this integrated, you know, this housing super app. It makes sure we find the best agents, that they are great service professionals, that they are using the modern digital tools you want, that they're using showcase to showcase your listing online, that they meet your needs. That's how they win more business. And then that's how we grow our business. And to your question, it has been a tumultuous few years in the real estate industry in terms of all the changes.