So, Jeremy, let me start with a simple observation about the housing market in 2026. It feels like it makes no one happy. Younger renters feel like they'll never be able to afford to buy. Current homeowners feel stuck with their pre-2022 lower mortgage rates. Home builders feel like projects don't pencil out given construction costs, land costs. So, big picture, what has gone wrong in housing in the last generation?
Well, let's put where we are in context. There are 4 million people that are happy because they transacted last year, and there are 4 million people that bought those transactions. So, there are people that are getting it done. The challenge is that 4 million is down 50% from the historical norms of 5 1/2, 6, 6 million plus. And that's because of all these structural imbalances in the market. That's because it is so unaffordable for so many buyers right now because we have such constrained supply. So, it is a challenging market right now. We are working really hard on it. I think you saw the Road to Housing Act just passed, which is starting to address some of the supply-side issues, but it is when you're off volume norms and you have prices up, it makes it tough for both sides.
So, we'll come back to the Road to Housing Act, but what exactly is Zillow doing? What can the tech layer do to help these markets clear and find a better equilibrium for more people?
Well, so Zillow, as many of you know, is a platform for all of us as buyers, renters, sellers. We're also a platform for the professional side, but it starts with our users, our consumers. And education is actually the biggest piece. When affordability is so challenged, helping with financial literacy, helping with tools to get renters ready to buy, bringing the next set of people in, that's the biggest thing we do. That's things like reporting your rent to the credit bureau so you can start to build your credit score. That's things like letting you shop with a pre-approval. When in an inventory-constrained environment and so many things are unaffordable, you can get pre-approved and we can actually tell you what is actually in your budget while you're shopping, so you don't have a bunch of false hope. So, tools and product is one, but policy and education is another and trying to make sure we actually get more supply online is a big area of focus for us as well because that's ultimately how you get the housing market more affordable.
So, let's talk about the Road to Housing Act that became law over the weekend. A lot in it. We're not going to have time to go through a bunch of provisions, but what exactly stands out to you as something that really has some promise in helping fix the situation?
That it's so supply-side focused. I think that's why we're such supporters of it. We all love to talk about mortgage rates. That's what we feel every day, you know, 6-plus percent mortgage rates and the lows we had post-COVID. And that matters. I mean, every point on your mortgage rate impacts your affordability. But the real reason homes are unaffordable is the average payment for a traditional buyer, even someone who could get to 20% down, has doubled from the pandemic, right? From just under a thousand dollars to just under two thousand dollars. And incomes obviously have not doubled. They've gone up maybe a third over that time period. The driver of that is supply.
We are nearly five million homes underbuilt. Since the global financial crisis, there have been a bunch of structural things that have just made it that builders aren't building enough homes. And the Road to Housing Act really tries to address that, right? Streamlining and encouraging state and local governments to streamline permitting and zoning reform, modernizing financing tools to help more buildings get online, fast-tracking pre-approved designs, tools that will hopefully help get more states to drive more supply. And more supply is ultimately how we ease the affordability crisis.
Just from telling that, there's a political shift happening. This was such overwhelming bipartisan support. You don't see that in Washington very often, but housing supply seems to be an issue where...
I mean, that's what we're most pleased by is this does seem like a pretty universal issue to address for all of us. And it's not an overnight fix. I mean, we accumulated that housing deficit over more than a decade. So, we're not going to flip a switch, but you are seeing some states do it really well. Austin and Denver are two cities that have built a lot of supply in both rent and for sale, and you've seen rents come down in Austin, and you've seen home prices come down modestly in Denver to ease the affordability crisis, and you've seen transactions in those markets go up so that more people can actually get into a home.
So, housing is also a sector where there's a lot of friction, a lot of transaction costs, real estate agent commissions, transfer taxes, title insurance. After you own the house, homeowner's insurance. Technology is supposed to reduce these frictions. Why hasn't it happened yet? What can be done?
Well, that's our dream at Zillow is to make that app on your phone as seamless and delightful as all the other apps on your phone, and it's not, right? For those of you who've been through the process, we do a study of home buyers and sellers every year, and the stat that really breaks my heart is that nearly half of all home buyers cry at some point during the process. The dreaming and the shopping part is fun, the scrolling endlessly at Zillow is fun, but once you start to tour and make offers and get pre-approved and work with parties to get your transaction done, it's a part-time job, and it doesn't work out so often, and technology is supposed to help.
The reason, to your question, that it's so hard is it's this multi-party complex transaction. You are hiring multiple professionals. The person you're buying the house from is hiring multiple professionals. They're all coordinating on systems. Those systems are regulated. They're done at the state and local level. And so, you have a lot of red tape, a lot of paperwork, a lot of process, and that is why many of you in the room probably don't realize we spend as much time on the professional side of the marketplace as we do on the consumer side. We build software and tools for all of them to digitize the transaction. Can you make an offer digitally? Can you tour digitally? Can you get pre-approved instantly and shop with that? Can you message with all those parties all inside the Zillow app as a buyer? Can a seller do that? Can we start to bring those things together? So, that's the dream is to get it to that. The reason it's not is because it's this huge complex transaction with multi-parties involved. But, I think especially with GenAI coming as the next technology wave, the ability for technology to automate a lot of that and make it easier is promise that's in front of us.
So, you mentioned AI. We're here to talk about America's competitive advantage, future of the US economy. Talk about internally at Zillow, what you're finding. What are the kinds of things AI is translating to in higher productivity? What are the areas where there's a lot more work to do?
