Zillow Has Gone Wild—for AI
This will not be a banner year for the real estate app Zillow. “We describe the home market as bouncing along the bottom,” CEO Jeremy Wacksman said in our conversation this week. Last year was difficult for the real estate market, and he expects things to improve only slightly in 2026. (As of January historical drop in home sales is indicative, which is itself too optimistic.) “The way to think about it is that 4.1 million existing homes were sold last year – a normal market is 5.5 to 6 million,” says Wacksman. He hastens to add that Zillow itself is doing better than the real estate industry in general. Still, his valuation is a quarter of his high water mark in 2021. A few hours after we spoke, Wacksman announced that Zillow had increased its revenue last quarter. Still, Zillow's stock price fell nearly 5 percent the next day.
Wacksman does see a bright spot – AI. Like every other business in the world, generative AI presents both an opportunity and a risk to Zillow's business. Wacksman much prefers to stick to the head. “We think AI is actually an ingredient rather than a threat,” he said on the earnings call. “Over the last couple of years, the LLM revolution has really opened all of our eyes to what's possible,” he tells me. Zillow is integrating AI into every aspect of its business, from the way it lists homes to having agents automate its workflow. Wacksman marvels that with Gen AI, you can search for “houses near my kids' new school, with a fenced yard, under $3,000 a month.” On the other hand, his customers can make those same questions on chatbots operated by OpenAI and Google, and Wacksman has to figure out how to make their next step a leap to Zillow.
In its 20-year history — Zillow celebrated its anniversary this week — the company has always used AI. Wacksman, who joined in 2009 and became CEO in 2024, notes that machine learning is the engine behind those “Zestimates” that measure the value of a home at any given time. Zestimates became a viral sensation that helped make the app irresistible, and sites like Zillow Gone Wild— that is too a tv show on the HGTV network — have built a business highlighting the most intriguing or outlandish listings.
More recently, Zillow has aggressively spent billions on new technology. One ongoing effort is the lifting of the presentation of houses for sale. A function called Sky Tour uses an AI technology called Gaussian Slatting to turn drone footage into a 3D rendering of the property. (I love typing the words “Gassian Slatting” and can't believe an indie band hasn't adopted it yet.) AI also featured in Zillow's Showcase component Virtual Stagingwhich furnishes homes with furniture that does not really exist. There is risky ground here: Once you leave the authenticity of a real photo, the question arises as to whether you are actually seeing a reliable representation of the property. “It's important that both buyer and seller understand the line between Virtual Staging and the reality of a photo,” says Wacksman. “A practically staged image must be clearly watermarked and disclosed.” He says he's confident that licensed professionals will adhere to rules, but if AI becomes dominant, “we need to evolve those rules,” he says.
Currently, Zillow estimates that only a single-digit percentage of its users take advantage of these exotic display features. Particularly disappointing is an event called Zillow Immerse, which runs on the Apple Vision Pro. Upon rollout in February 2024, Zillow called it “the future of domestic travel.” Note that it does not claim to be the near future. “That platform hasn't come to broad consumer prominence yet,” Wacksman says of Apple's underperforming innovation. “I think VR and AR will come.”
Zillow is on firmer ground with AI to make its own workforce more productive. “It helps us do our jobs better,” says Wacksman, who adds that programmers are releasing more code, customer support tasks have been automated, and design teams have shortened timelines for implementing new products. As a result, he says, Zillow has been able to keep its headcount “relatively flat.” (Zillow did cut some jobs recently, but Wacksman says it involved “a handful of people who didn't meet a performance bar.”)
