Zillow’s AI-Powered Resurgence: How the Real Estate Giant Is Reinventing Itself in a Sluggish Market

The real estate landscape in 2026 isn’t exactly setting the world on fire. With existing home sales plummeting to a 25-year low of 4.1 million transactions compared to the normal 5.5-6 million range, Zillow CEO Jeremy Wacksman isn’t sugarcoating the reality: “We describe the home market as bouncing along the bottom.”

Despite the industry-wide slump, Wacksman sees a silver lining in an unexpected place—artificial intelligence. While the real estate market struggles to regain its footing, Zillow is betting big on AI to transform everything from how homes are presented to how agents work.

The AI Advantage: Opportunity or Existential Threat?

Like every tech company navigating the generative AI revolution, Zillow faces a delicate balance. “We think AI is actually an ingredient rather than a threat,” Wacksman explained during the company’s recent earnings call. The CEO’s enthusiasm is palpable when describing how AI is reshaping the home search experience.

“Imagine searching for ‘homes near my kid’s new school, with a fenced-in yard, under $3,000 a month,'” Wacksman says, marveling at the natural language capabilities now possible. This conversational search represents a quantum leap from traditional keyword-based queries that have dominated real estate searches for decades.

But there’s a catch. As AI chatbots from OpenAI and Google become increasingly sophisticated, Zillow faces the very real possibility that users might never leave those platforms to visit Zillow.com. “We have to figure out how to make their next step a jump to Zillow,” Wacksman acknowledges, highlighting the competitive tension between AI platforms and traditional web services.

A 20-Year Journey of Innovation

This week marks Zillow’s 20th anniversary, and the company has been leveraging AI since its inception. The now-famous “Zestimates”—automated home value estimates—have been powered by machine learning since day one. These estimates became a cultural phenomenon, inspiring everything from viral social media accounts to dedicated TV shows.

The company’s appetite for innovation hasn’t waned. Zillow has invested billions in cutting-edge technologies, though not all experiments have paid off equally. Some initiatives are pushing the boundaries of what’s possible in real estate visualization, while others serve as cautionary tales about the hype cycle.

Pushing Visual Boundaries with Gaussian Splatting

One of Zillow’s most ambitious visual projects is SkyTour, which uses a technology called Gaussian Splatting to transform drone footage into immersive 3D renderings. The name alone—”Gaussian Splatting”—sounds like it belongs to an experimental indie band rather than a real estate technology.

The technology represents a significant leap forward in how properties can be experienced remotely. Instead of static photos or basic virtual tours, potential buyers can now explore properties in ways that were previously impossible without physically being there.

Virtual Staging: The Future of Home Presentation

Another AI-powered feature, Virtual Staging, allows empty homes to be furnished with digital furniture that doesn’t actually exist. While this technology offers tremendous value in helping buyers visualize a property’s potential, it also raises important questions about authenticity and transparency.

“It’s important that both buyer and seller understand the line between Virtual Staging and the reality of a photo,” Wacksman emphasizes. The company has implemented strict guidelines requiring clear watermarks and disclosures on virtually staged images. “A virtually staged image has to be clearly watermarked and disclosed,” he insists, acknowledging the need to evolve these rules as AI becomes more prevalent.

Currently, only a single-digit percentage of Zillow users are taking advantage of these advanced display features, suggesting either limited awareness or cautious adoption among real estate professionals.

The Apple Vision Pro Experiment: A Reality Check

Not every AI and VR experiment has yielded the expected results. Zillow’s foray into Apple’s Vision Pro headset with Zillow Immerse was initially heralded as “the future of home tours.” However, the platform’s limited consumer adoption has tempered expectations.

“That platform hasn’t yet come to broad consumer prominence,” Wacksman admits about Apple’s underperforming innovation. Nevertheless, he remains bullish on the long-term potential of VR and AR in real estate, suggesting that timing rather than viability may be the issue.

AI as a Workforce Multiplier

Where Zillow is seeing more immediate returns is in using AI to enhance its own operations. The technology is helping programmers write more code, automating customer support tasks, and accelerating product development timelines. This operational efficiency has allowed Zillow to maintain a relatively flat headcount despite expanding its technological capabilities.

Recent job cuts affected “a handful of folks that were not meeting a performance bar,” according to Wacksman, rather than being driven primarily by AI-driven automation. The company appears to be using AI to augment human capabilities rather than wholesale replacement.

The Road Ahead

Despite the challenging market conditions and the stock price decline following its earnings announcement (nearly 5 percent drop the day after reporting increased quarterly earnings), Wacksman remains optimistic about Zillow’s AI-driven transformation.

The company’s valuation, currently at a quarter of its 2021 peak, reflects the broader market challenges rather than questions about Zillow’s strategic direction. As the real estate market eventually recovers and AI technologies mature, Zillow appears positioned to emerge as a more efficient, innovative, and competitive player in the digital real estate ecosystem.

The question isn’t whether AI will transform real estate—that transformation is already underway. The real question is whether Zillow can maintain its position as the go-to platform for home buyers and sellers in an increasingly AI-mediated world. Based on Wacksman’s vision and the company’s aggressive investment in AI technologies, the answer appears to be a qualified yes—with the understanding that the journey will require constant adaptation and innovation.

Zillow’s 20-year anniversary celebration this week serves as both a milestone and a reminder: in technology and real estate, standing still isn’t an option. The company that once revolutionized home searching with Zestimates is now betting that AI will be the key to its next two decades of growth.

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