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 dismal for the real estate market, and he expects things to improve only marginally in 2026. (If January’s historic drop in home sales is indicative, that even is overoptimistic.) “The way to think about it is that there were 4.1 million existing homes sold last year—a normal market is 5.5 to 6 million,” Wacksman says. He hastens to add that Zillow itself is doing better than the real estate industry overall. Still, its valuation is a quarter of its high-water mark in 2021. A few hours after we spoke, Wacksman announced that Zillow’s earnings had increased last quarter. Nonetheless, Zillow’s stock price fell nearly 5 percent the next day.
Wacksman does see a bright spot—AI. Like every other company in the world, generative AI presents both an opportunity and a risk to Zillow’s business. Wacksman much prefers to dwell on the upside. “We think AI is actually an ingredient rather than a threat,” he said on the earnings call. “In the last couple 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 showcases houses to having agents automate its workflow. Wacksman marvels that with Gen AI, you can search for “homes near my kid’s new school, with a fenced-in yard, under $3,000 a month.” On the other hand, his customers might wind up making those same queries on chatbots operated by OpenAI and Google, and Wacksman must figure out how to make their next step a jump to Zillow.
In its 20-year history—Zillow celebrated the 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 gauge a home’s worth at any given moment. Zestimates became a viral sensation that helped make the app irresistible, and sites like Zillow Gone Wild—which is also a TV show on the HGTV network—have built a business around highlighting the most intriguing or bizarre listings.
More recently, Zillow has spent billions aggressively pursuing new technology. One ongoing effort is upleveling the presentation of homes for sale. A feature called SkyTour uses an AI technology called Gaussian Splatting to turn drone footage into a 3D rendering of the property. (I love typing the words “Gassian Splatting” and can’t believe an indie band hasn’t adopted it yet.) AI also powers a feature inside Zillow’s Showcase component called Virtual Staging, which supplies homes with furniture that doesn’t really exist. There is risky ground here: Once you abandon the authenticity of an actual photo, the question arises whether you’re actually seeing a trustworthy 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 virtually staged image has to be clearly watermarked and disclosed.” He says he’s confident that licensed professionals will abide by rules, but as AI becomes dominant, “we have to evolve those rules,” he says.
Right now, Zillow estimates that only a single-digit percentage of its users take advantage of these exotic display features. Particularly disappointing is a foray called Zillow Immerse, which runs on the Apple Vision Pro. Upon rollout in February 2024, Zillow called it “the future of home tours.” Note that it doesn’t claim to be the near-future. “That platform hasn’t yet come to broad consumer prominence,” says Wacksman of Apple’s underperforming innovation. “I do think that VR and AR are going to come.”
Zillow is on more solid ground using AI to make its own workforce more productive. “It’s helping us do our job better,” says Wacksman, who adds that programmers are churning out 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 that involved “a handful of folks that were not meeting a performance bar.”)
