Shaina Mishkin
A turf war over the online home listings business has been brewing for a while. Then Google entered the fray.
As part of a pilot program, the search giant is placing listings at the top of some Google's search results. That Google could make a push into home listings sent stocks of companies that dominate that business into a spiral. On Dec. 15, after weekend news of Google's test spread on social media, Zillow Group's market value lost about $1.5 billion. Shares of CoStar Group, the parent of Homes.com, fell to their lowest level in over three years. Both have regained ground, but haven't fully recovered.
The beating is unwarranted. There is no indication that the Google feature will see a widespread rollout. And underneath the well-known home listing sites lie increasingly diversified businesses.
The Google test is tiny in scope: listings are available to users on mobile devices in select cities such as San Francisco and Miami. A Google spokesperson told Barron's it was "a small experiment," without specifying when it began or how long it would last. And Wall Street thinks investors overreacted.
Analysts note that Google parent Alphabet has made previous attempts at offering home listings that faded out. But as Benchmark analyst Daniel Kurnos says: "No one likes it when an 800-pound gorilla comes sniffing around."
The episode unveiled fear of disruption in the housing technology sector -- a threat that runs deeper than just Google search results and includes concern about how artificial intelligence can upend home listings. More disruption is coming: Agents told Barron's that they are receiving increasing referrals -- of varying quality -- from AI chat platforms.
Companies are making preparations to compete. The big names in housing services and the search platforms they operate -- Zillow, Rocket's Redfin, Costar's Homes.com -- offer more than just house browsing, and their other services are a buffer against future disruptions to the way buyers shop and agents advertise. Realtor.com, which also has a listings site, is operated by Barron's parent News Corp.
Zillow's core listings product looks best insulated against more competition because of its organic use and brand recognition, analysts say. Zillow is the most-viewed U.S. real estate website, according to website traffic measuring company Semrush, and most of its users -- 80%, according to an investor presentation -- start their search directly on the company's website or mobile application.
Zillow in recent years has pivoted away from home listing marketing for agents as the core component of its business. As of its most recent earnings, Zillow's main sources of growth have come from its businesses offering mortgages and rentals listings. The company also offers products for agents, including workflow management software and home listing tools favored by some sellers. "The combination of the business that we've built is far more diversified than it was five years and 10 years ago," Zillow Chief Financial Officer Jeremy Hofmann said at a December UBS technology conference.
Benchmark's Kurnos, an analyst covering internet, broadcasting, and media companies, rates Zillow's Class A shares a Buy, with a $95 price target, 36% higher than a recent $69.93. "To think that Google would somehow displace the most complete end-to-end solution in the marketplace with the strongest and stickiest agent product suite seems rather far-fetched," he wrote.
CoStar's Homes.com was pitched as an agent-friendly alternative to dominant listing sites. The website focuses on services for seller's agents, as opposed to the lead generation model used by Zillow and others. CoStar acquired the website in 2021, and announced its big push with a Super Bowl commercial in 2024.
Since then, Homes.com's usage has grown but so has its budget. The size of CoStar's spending on marketing -- $1.36 billion in 2024, up from $684 million in 2022 -- is weighing on the stock as the effort has dragged on earnings and profit. CoStar stock is down nearly 20% since the Friday before 2024's Super Bowl, and down about 6% in 2025.
Activist investors have taken notice. In April, CoStar announced several board changes and the creation of a capital allocation committee that will "review the company's ongoing investment in Homes.com and ensure an appropriate timeline for profitability" as part of a support agreement with investment management company D.E. Shaw and hedge fund Third Point.
Homes.com is the relatively new arm of CoStar's legacy commercial real estate businesses, including its data and analytics software suite and marketing platforms. Growth in these businesses, plus narrowed losses at Homes.com driven by improved capital allocation, could expand the company's earnings before interest, taxes, depreciation, and amortization, or Ebitda, by more than seven times over the next several years, Third Point CEO Daniel Loeb wrote in a letter to investors.
Concerns about tech disruption have only added to the stock's recent pain. But the company is investing 50% of its Homes.com software development on AI, CoStar CEO Andy Florance said on an October conference call. "AI offers transformative opportunities to unlock tremendous value in real estate," he says. "I believe few products are better positioned to cohesively capitalize on this opportunity than is Homes.com, Apartments.com, LoopNet, and CoStar."
Rocket, one of the largest U.S. mortgage originators, entered the listings space in earnest with its purchase of Redfin, a brokerage and listings portal, in 2025. As of its third quarter, more than one in 10 of Rocket's retail loan closings came from a customer who used both Redfin and Rocket, Rocket CEO Varun Krishna said on the call. "We expect this to only increase," he added.
Rocket has a valuable opportunity to monetize Redfin's current visitors, according to a group of KBW analysts led by Ryan Tomasello. "That would still be the case if there was some diminution in this number over time because of Google's strategy," they wrote.
Should competition heat up, or demand for home listing portals wane, Rocket already has a dominant grasp on the mortgage origination and servicing industry, with its all-stock $14.2 billion deal for loan servicer Mr. Cooper bringing an estimated one-in-six mortgages under the combined companies' purview. The opportunity for Rocket to drum up business by refinancing Mr. Cooper borrowers is among the reasons Rocket stock is up nearly 80% this year.
Big tech is already a growing presence in residential real estate. Meta's Instagram and Facebook were frequently mentioned among agents' favorite tools for marketing homes for sale.
Wendy Monday, a broker at the Nashville-based Onward Real Estate, says she advertises on Zillow because "it's the one with the most eyeballs on it." But she's watching the Google test and would welcome a new entrant.
"The more platforms there are, the sharper their tools all have to be," she says. "It makes the search experience better for the end user at the end of the day."
Write to Shaina Mishkin at shaina.mishkin@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 01, 2026 03:00 ET (08:00 GMT)
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