Zillow Home Loans Continues Its Unprofitable Run
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Like much of the industry, Zillow's mortgage operation, which includes Zillow Home Loans, has seen a steep decline in revenue and continues to burn cash.
Why it matters: Attaching mortgage is a key component of Zillow's "Housing Super App" and future growth strategy; the longer it falters, the less likely Zillow is to achieve its long-term aspirations.
Zillow's 2025 goal includes an additional $800 million in revenue from adjacent services -- primarily mortgage.
Dig deeper: Zillow's mortgage segment, which includes its mortgage lead gen marketplace and in-house lender Zillow Home Loans, is consistently unprofitable.
In the first half of 2022, Zillow spent $1.85 for every $1 in mortgage revenue.
That's a $65 million loss in the first half of 2022, and a combined loss of $180 million since 2017.
Context: The entire mortgage industry is getting hammered this year, with dropping leads, loan volumes, and revenue.
But even before the recent slowdown, Zillow Home Loans struggled with attach rates and consistent unprofitability during boom years.
According to this Mortgage Bankers Association study, 96 percent of mortgage firms were profitable in 2021; Zillow Home Loans was not.
The bottom line: Zillow Home Loans' path to profitability remains long, arduous, expensive, and uncertain.
Ultimately, attaching mortgage makes a great slide on investor presentations, but is very hard in real life.
Go deeper: Ecosystem Disruption in Mortgage Looking Exceedingly Traditional.
