Why You Were Right For Not Buying Zillow Stock In 2021

In early 2021, Zillow share prices grew to an all-time-high closing price of $203.79 on February 16. At the time, the company was becoming fairly profitable, reporting a 22% year-over-year (YoY) revenue increase at the end of 2020, per Zillow Group's Q4 2020 shareholder newsletter. The company's website was bringing in increased revenue as Americans browsed homes during the pandemic, and investors were particularly excited about Zillow Offers, the company's instant-buying initiative through which it bought and resold homes for profit.

In its shareholder newsletter, CEO Rich Barton and CFO Allen Parker shared that Zillow's analysts projected an even stronger housing market in 2021, and expressed confidence in higher levels of home sales. However, those predictions didn't pan out for the company. While Zillow Offers brought in high levels of revenue, the segment never actually made a profit. On October 18, 2021, Zillow announced it was pausing instant buying, and ultimately shut down Zillow Offers altogether just weeks later. After Zillow's initial announcement on October 18, stock prices dropped by about 9.45%. By December 31, individual stock prices fell to $63.85, a 68.06% decrease from their February peak.

If you had purchased 10 shares of Zillow in early January 2021, your investment would have been worth approximately $1,307.70. At its peak in February, it would have grown to $2,037.90, before dropping significantly to about $638.50. As of October 2026, the company has never come close to recovering those early 2021 numbers. Its closing stock price was only $30.77 on October 28, 2026.

Zillow's stock prices initially soared in 2021 due to the growth of Zillow Offers. As Zillow tried to outpace other growing iBuyers like Opendoor, it bought up houses during the COVID-19 pandemic — an era marked by market conditions that had caused higher home values and low mortgage rates. However, these same factors that caused a real estate boom also made the market unpredictable. Zillow's AI model, used for estimated purchasing costs and upgrades that could increase resale value, couldn't make accurate predictions among the chaos. Zillow was buying and renovating houses for more than it could sell them. Seeing as the company reported it had 1,531 houses in its inventory at the end of 2020, this was a recipe for disaster.

Barton stated in Zillow's Q3 2021 earnings report, "We've determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility." After this announcement, Zillow's stock dropped from $87.20 on November 2 to $65.47 on November 3. As part of the Zillow Offers shutdown, the company laid off about 25% of its employees, and lost about $881 million throughout all of 2021. 

All told, Zillow hit a peak market value of $48.62 billion in February 2021. By the end of the year, that figure had fallen to $16.22 billion. This translated to a $32.4 billion combined paper loss for investors in less than a year.