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Why Zillow Has Already Won the Housing Market
Zillow remains a 100x opportunity because of its ability to dominate housing discovery and transactions long-term.
Travis Hoium
April 11, 2025
When I wrote the Zillow Spotlight on October 31, 2023, the company was a popular app for finding homes, but it was far from “winning” the housing market.
Realtors still controlled the market, and the idea that Zillow could aggregate demand onto one app for the entire country (eventually the world?) was still far-fetched given agents’ power. And rentals were a bifurcated market, to say the least.
But the 10x — or 100x — opportunity was for Zillow to be an aggregator of demand and ultimately own the best strategic position in the housing market.
A lot has changed since then, and I think we are starting to see aggregation take hold.
Aggregation
For some background, this is from Ben Thompson’s Aggregation Theory:
The fundamental disruption of the Internet has been to turn [supply being the point of power in the market] on its head. First, the Internet has made distribution (of digital goods) free, neutralizing the advantage that pre-Internet distributors leveraged to integrate with suppliers. Secondly, the Internet has made transaction costs zero, making it viable for a distributor to integrate forward with end users/consumers at scale.
This has fundamentally changed the plane of competition: no longer do distributors compete based upon exclusive supplier relationships, with consumers/users an afterthought. Instead, suppliers can be commoditized leaving consumers/users as a first order priority. By extension, this means that the most important factor determining success is the user experience: the best distributors/aggregators/market-makers win by providing the best experience, which earns them the most consumers/users, which attracts the most suppliers, which enhances the user experience in a virtuous cycle.
This is the visual he used to describe the concept.
I’m going to go through the three statements I highlighted, but here’s another simple way to think about aggregators. A great aggregator controls demand because people choose to interact with them every day. Netflix, Google, Facebook, and Uber are examples of aggregators.
We need to ask a simple question: Who do customers choose to interact with?
That’s usually the winner in the market.
Consumers As an Afterthought
Shortly after the spotlight was published, the National Association of Realtors was found to have colluded against customers by tying buyers’ agents’ fees with sellers’ agents’ fees. Nothing screams customers as an afterthought like exorbitant fees and collusion.
The finding makes sense when you think about it. Why isn’t there more price competition in the agent market in the internet age, and why are agents still charging 6% to sell a home?
And why do buyer’s agents get 3% for showing buyers around?
In the 1950s, when information was scarce, the structure made sense. But today, you can find the value of any home or any listing in the U.S. with a few clicks of a button.
The changes made to the realty business after the collusion finding won’t fundamentally cause changes, but it shows the crack Zillow can exploit. Now, buyers and sellers need to disclose their fees and negotiate them. If you’re cool with paying a buyer’s agent $15,000 to show you around and help find a $500,000 house, that’s great. But you’ll know how much they’re making, and if you do the legwork and only want an agent to help file paperwork, maybe that’s worth less.
I’ll note that we didn’t use an agent when buying the home we live in today, choosing to pay $1,000 for the same legal forms from an agent, and we negotiated out the buyers’ agent fee from the home price. We were the exception in 2018, but soon, we may become the rule.
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