Zillow CEO Jeremy Wacksman is concerned over trends in housing market activity despite strong consumer interest. High mortgage rates and affordability issues create persistent market stagnation.
On the Q1 2025 Zillow earnings call earlier this month, CFO Jeremy Hoffman noted that unpredictable economy will feed into housing market challenges.”I think on the housing market front, it’s been challenged for a while,” Hoffman said. “We expect it to continue to bounce along the bottom. This has been the environment we have been operating in since 2022. And we expect more of the same in 2025.”
“Given volatile macro and interest rates expected to remain elevated, we expect housing volumes will likely remain subdued through the remainder of the year,” he continued.
The CEO has highlighted the challenges in the housing market, particularly regarding affordability and availability, according to multiple news reports. He has noted that while demand for housing may still be present, the high cost and limited supply are preventing many potential buyers from following through with purchases, as reported by MSN.
One in four Americans spent over 30% of their income on housing in 2023. This has made it difficult for renters and buyers to sustain the rising cost of housing. Wacksman points out that the affordability challenge is often an availability challenge, as there are fewer homes available for purchase than desired.
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Affordability and Availability: Wacksman has repeatedly emphasized that the primary challenges in the housing market are not just high interest rates, but also the limited number of homes available for sale, according to business report. This shortage of inventory, coupled with rising prices and high interest rates, is making it difficult for many buyers to afford homes.
- “Pent-Up Demand”: While transactions may be low, Wacksman has also stated that there is still significant “pent-up demand” for housing, indicating that people are still looking to buy and move, but are being held back by the market conditions.”
- Zillow’s Strategies: Zillow Group is focusing on strategies that leverage technology to streamline transactions and support buyers and sellers, according to HousingWire.
- Growth in Other Segments: Despite the challenges in the residential market, Zillow has experienced growth in its rental and mortgage segments, as reported by CNBC.
However, a drop in home sales doesn’t always signal a decline in demand. During the company’s earnings call, Zillow CEO Jeremy Waksman emphasized the ongoing challenges in the housing market. “What’s holding back transaction volume is the hesitation among potential buyers,” he explained. “The demand still exists—it’s just that people aren’t in a position to move forward and make a purchase.”
“That’s the affordability challenge, which is exacerbated by lack of inventory….So you’ll see that in the buy side signals,” he explained. “You’ll see that in the demand signals and our traffic and other companies that report on buy side demand. Even with the challenges in the outside for their wallet, right, the pent-up desire is still there.”
According to Zillow, monthly home values dropped in 27 out of the 50 states this year. While Florida, Colorado, Washington, D.C., California and Washington state experienced the greatest value declines from March to April, the data could foreshadow a larger housing market shift.
Alex Beene, financial literacy instructor for the University of Tennessee at Martin, told Newsweek that it was “a bad combination of factors that are causing housing values to trend downward.” Other experts pointed to economic uncertainty discouraging buyers.
Zillow data shows that real estate prices are declining in a growing number of markets across the country. In the post-pandemic period, states like Texas and Florida have seen home values drop, driven by increased inventory and softening demand. But the trend isn’t limited to these areas—home prices nationwide are signaling a broader market shift.
Florida experienced the steepest decline, with home values falling by 0.55 percent. Following closely were Colorado, Washington, D.C., California, and Washington state, which also posted significant decreases. Arizona, Louisiana, West Virginia, Texas, and Georgia saw declines of up to 0.37 percent.
Even in high-demand states like California—where home prices have traditionally remained strong—there are signs of correction. Although California’s home values are still up 1.3 percent year-over-year, they dropped by 0.42 percent in just the past month.
“This data has important implications for housing market analysts, homebuyers, and investors going into 2025,” said Gerli. “The question is no longer if prices will drop, but rather where they’re dropping—and by how much.”
What other people are saying:
Kevin Thompson, CEO of 9i Capital Group and host of the 9innings podcast, told Newsweek: “Housing prices have declined due to their rapid rise after the pandemic. The economic shift from migration out of the West to now, a slowing of that same migration and overbuilding in places like Austin, TX, is now seeing an equilibrium shift downward. The median cost of homes rose sharply coming out of the pandemic, and that rise was unsustainable.”
Hannah Jones, senior economic research analyst with Realtor.com, told Newsweek: “This summer’s housing market is expected to display familiar seasonal patterns, such as increased home sales and rising prices, but overall activity may remain subdued as buyers contend with elevated housing costs and lingering economic uncertainty. In regions like the South, where inventory is more abundant, these conditions could entice some buyers to enter the market.”
“Still, persistently high mortgage rates mean affordability remains top of mind, and many shoppers will be looking for more bang for their buck. Builders have pivoted toward offering smaller, more affordable homes and a range of incentives to entice buyers, but this strategy may be tested if the cost of construction inputs continues to rise.”
Michael Ryan, finance expert and founder of MichaelRyanMoney.com, told Newsweek: “It’s fascinating how we’ve gone from “your home is worth what?!” to “reality check” territory now. The housing market isn’t crashing dramatically, more like it’s finally coming back down to earth from a sugar high.”
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