Zillow has grown into a $13 billion real-estate giant, connecting people with realtors through its app across the country—while fueling late-night wish-scrolling for bored urbanites nationwide. But it’s stayed in the entire home category, whether that’s a single-family home or a unit within a multifamily development, until now.
Welcome to single-room rentals.
It’s a step into Craigslist land for the Seattle-based brokerage, but it’s also an indictment of the affordability crisis plaguing the housing market. Plus, it eliminates the somewhat cringey practice of marketing your space—and yourself—on a housing Facebook page. Landlords can now list single rooms on Zillow instead of trying to find a tenant to fill the entire home, which can often be costly or out-of-reach for renters.
“For the renter, it opens up those affordable options,” says Lily Ferguson, senior manager of product, who led the team behind rooms for rent at Zillow. “Maybe previously if you were living on your own, you were only able to rent out a studio [apartment], but now you might be able to consider living in a house with a yard or living in a neighborhood that would have been previously out of reach.”
More affordable options
Much of the inspiration behind the new Zillow feature was to help renters find more affordable housing options as rents have surged nearly 30% since the pandemic, leaving 50% of renters cost-burdened, according to a Harvard University study.
Zillow anticipates that this will mostly appeal to Gen Zers and millennials, who have been disproportionately affected by housing affordability. Indeed, 59% of young renters say they feel uncertain about how they would start the search for a roommate, and another 60% report finding a compatible roommate more challenging than finding a romantic partner, according to a Zillow survey conducted by the Harris Poll.
The new feature can also help current homeowners. With high mortgage payments, many new homeowners have effectively become house poor—paying more than the suggested 30% of their monthly income. That’s led more new homeowners to try “house hacking” or renting out a single room or rooms in their home to generate income to help pay for their mortgage.
“We see this as an opportunity to potentially improve affordability for either existing or new homeowners by offsetting more mortgage expenses with a new income stream,” Ferguson tells Coins2Day. Plus, it gives current landlords more options for how they divvy up their rental properties—and current renters can even seek permission from their landlords to list part of their rental property as a sublease.
Landlords “were previously only able to list entire homes or an entire condo unit, [so] this just gives them more functionality,” Ferguson says. “We’re seeing engagement and enthusiasm around that.”
Zillow emphasizes, however, that this new offering is different from short-term rental companies like Airbnb, which has been under fire for a number of reasons—namely calling into question existing legislation related to the STR industry.
Zillow’s new feature is intended to help renters find longer-term properties, or their primary residence, Ferguson says. Although landlords can select the length of the lease and other terms, these room listings are not targeted for short-term stays or vacations, she says.
“We know finding the right place to call home isn’t one-size-fits-all,” Michael Sherman, vice president of Zillow Rentals, said in a statement. “By introducing room listings, we’re crafting a robust marketplace of options that truly reflects the varied needs of renters.”
New product functionality
Through Zillow’s new product, renters can search for properties using filters including home type, square footage, rent, and other features of the property. Listings will also include more granular details such as current roommate information; whether a room has its own private bathroom; if there’s access to a backyard and shared living spaces; if there are pets already living on the property and any furniture available for use.
Landlords must grant renters permission before listing a room to make sure that all rental agreements and property policies are met, according to Zillow. Homeowners and landlords will also have access to Zillow Applications for the tenant screening process and Zillow Payments for online rent collection, which are both available at no cost.
Zillow is also developing new tools to help renters find financial aid and report their on-time rent payments to credit bureaus, Ferguson says.
“We’re also excited about this launch because it operates on both sides of the marketplace,” she says. “Our mission really is to help people get home.”