Zillow Goes Crazy with AI Integration

This will not be a standout year for the real estate app Zillow. “We describe the home market as bouncing along the bottom,” CEO Jeremy Wacksman mentioned during our discussion this week. Last year proved to be bleak for the real estate sector, and he anticipates only slight improvements in 2026. (Given January’s unprecedented plunge in home sales, even that might be overly optimistic.) “For perspective, there were 4.1 million existing homes sold last year—a typical market consists of 5.5 to 6 million,” Wacksman explains. He quickly notes that Zillow itself is faring better than the overall real estate industry. However, its valuation is merely a quarter of its peak in 2021. Shortly after our conversation, Wacksman revealed that Zillow’s earnings had risen last quarter. Still, Zillow’s stock price dropped nearly 5 percent the following day.

Wacksman does identify a silver lining—AI. Like many companies globally, generative AI offers both opportunities and challenges for Zillow. He prefers to emphasize the positive aspects. “We see AI as more of an ingredient than a threat,” he stated during the earnings call. “The last couple of years have shown us what’s possible with the LLM revolution,” he shares with me. Zillow is embedding AI into every facet of its operations, enhancing how it showcases homes and allowing agents to automate workflows. Wacksman is impressed that with Gen AI, users can search for “homes near my kid’s new school, with a fenced-in yard, under $3,000 a month.” Conversely, his clients may conduct similar searches via chatbots from OpenAI and Google, and Wacksman must strategize on how to guide them to Zillow.

Throughout its 20-year journey—celebrated this week—Zillow has consistently utilized AI. Wacksman, who joined in 2009 and assumed the CEO role in 2024, points out that machine learning powers the “Zestimates” assessing a home’s market value at any time. Zestimates became a viral phenomenon, contributing to the app’s appeal, leading to platforms like Zillow Gone Wild—which also has a TV presence on HGTV—showcasing the most fascinating or unusual listings.

Recently, Zillow has invested billions in advancing technology aggressively. One ongoing initiative aims to enhance how homes for sale are presented. A feature called SkyTour employs an AI technology known as Gaussian Splatting to convert drone footage into a 3D depiction of the property. (I enjoy typing “Gaussian Splatting” and wonder why no indie band has adopted that name yet.) AI also powers a function within Zillow’s Showcase called Virtual Staging, which adds digitally-created furniture to homes. There is a risky aspect here: abandoning the authenticity of actual photos raises concerns about whether a trustworthy representation of the property is being viewed. “It’s vital for both buyers and sellers to recognize the distinction between Virtual Staging and a real photo,” emphasizes Wacksman. “A virtually staged image must be clearly marked and disclosed.” He expresses confidence that licensed professionals will adhere to the guidelines, but as AI becomes prevalent, “we need to adapt those guidelines,” he states.

Currently, Zillow estimates that only a small percentage of its users utilize these advanced display features. Particularly underwhelming is Zillow Immerse, which operates on the Apple Vision Pro. Upon its launch in February 2024, Zillow termed it “the future of home tours.” It’s notable that it doesn’t claim to be the immediate future. “That platform hasn’t gained widespread consumer traction yet,” Wacksman comments on Apple’s struggling innovation. “I do believe that VR and AR are on the horizon.”

Zillow is finding greater success using AI to enhance its workforce productivity. “It’s helping us perform our roles more effectively,” says Wacksman, noting that programmers are producing more code, customer support activities have been automated, and design teams have expedited timelines for new product launches. Consequently, he explains, Zillow has managed to keep its employee count “relatively flat.” (Zillow recently reduced its workforce somewhat, but Wacksman clarifies that this involved “a few individuals who weren’t meeting performance standards.”)