This story originally appeared on Real Estate News.
The housing market might remain tepid in 2024, but CEO Rich Barton expects things to heat up for Zillow this year.
During an investor call following the company’s fourth-quarter earnings release — which showed Zillow beating expectations for revenue — Barton said the company will continue to outperform analyst expectations and the market itself in 2024.
“You’ve heard today about our tremendous progress that we’ve made over the past two years on our journey to transform and replatform this largest of industries,” Barton said at the end of the earnings call. “As we look ahead, we are pressing down on the accelerator, increasing the breadth and depth of our products and services across more markets.”
So what has Barton upbeat about Zillow’s performance in 2024? Progress toward an integrated homebuying experience, and strong growth in non-core businesses.
The timing is right, no matter how much Homes.com is spending
Barton characterized 2022 as a year of reorganization — largely due to the wind-down of Zillow’s iBuying program — and 2023 as the year of rolling out new products. This year, he said, the company is ready to expand on those products as it evolves into the “housing super app,” which Barton indicated will define the company moving forward. In his letter to shareholders, he wrote: “The housing super app is here today. It’s called Zillow.”
One example of this evolution is “enhanced markets,” in which the company brings together Premier Agents and Zillow Home Loans to offer an integrated homebuying experience. Zillow had nine enhanced markets at the end of 2023, and during the earnings call, announced plans to increase that number to 40 by the end of the year, following strong test results in the initial markets.
This type of expansion has Barton feeling confident that the company will have double-digit revenue growth in 2024. And he doesn’t think that growth will be hampered by the competition — including Homes.com, which invested heavily in a Super Bowl media blitz. When asked about CoStar’s billion-dollar marketing plan for Homes.com, Barton said that, so far, Zillow is not seeing any impact from the Super Bowl advertising spend or the buzz leading up to it.
He added that Zillow’s bullish revenue forecast was made with this competitive context in mind.
“We have always believed that the most important part of the market mix is the product itself,” Barton said. “It is what has put us in the position we are today of being the traffic leader. …This is what ensures that we win long term.”
Rentals are showing strong growth
Zillow isn’t just building new products, it’s also growing its established businesses, like rentals. The fourth quarter of 2023 was a good one for rentals, with revenues increasing 37% year-over-year to $93 million.
The company plans to grow its rental market further by expanding the number of multifamily properties on its website. Barton also noted in his shareholder letter that rentals was added as a “growth pillar” this quarter as a marketplace with “huge opportunity.”
Zillow’s latest investor presentation, which Barton referenced in the letter, shows rentals accounting for 20% of the company’s revenue. In fact, buy-side revenue streams no longer make up a majority of Zillow’s revenue as the company has continued to invest in rentals, new construction, ShowingTime+ and sell-side products.
Mortgage loans are on the upswing
Zillow is also making progress with its mortgage business, Zillow Home Loans, even as overall mortgage loans have declined significantly in the past year. The company stated that its mortgage origination volume grew 100% year-over-year as it has worked to integrate its home loans and Premier Agent businesses.
During the earnings call, Barton noted that in the four original enhanced markets where mortgages were part of the “super app” mix, customer adoption rates climbed from 6% to 15% over the course of 2023.
“We’ve made a great deal of progress in 2023, and we will make more in 2024,” Barton said.
