Zillow's real-time affordability tool helps shoppers quickly find homes within their budget

Rhea-AI Summary

Zillow has launched BuyAbility, a real-time affordability tool on their app that helps home shoppers instantly determine if they can afford and qualify for specific listings. The tool, powered by Zillow Home Loans, provides personalized estimates based on users' financial information and current mortgage rates. When mortgage rates shift from 7% to 6%, a median-income household's buying power increases from $380,000 to $420,000 with a 20% down payment. According to Zillow data, 79% of recent buyers prioritize staying within budget, and in September, 27.3% of listed homes were affordable for median-income households, up from 22.7% in May when rates peaked above 7%.

Positive

• Introduction of innovative real-time affordability tool enhancing user experience
• Tool potentially increases user engagement and conversion rates for Zillow Home Loans
• Expansion of services in mortgage lending segment strengthening market position

Negative

• Tool not available in New York state, limiting market reach
• Currently only available on mobile app, not desktop platform

This first of its kind personalized tool will change how buyers shop for homes

SEATTLE, Nov. 19, 2024 /PRNewswire/ -- Home shoppers now have a way to instantly understand if a home on Zillow fits within their budget. BuyAbility is an affordability tool from Zillow Home Loans that gives buyers a real-time, personalized estimate of the home price and monthly payment they can afford, and their likelihood of qualifying for a loan. Instead of wasting time on homes they can't afford, shoppers can now clearly and quickly identify homes on Zillow within their true budget.

BuyAbility is the tool for this moment. Homeownership can feel out of reach for aspiring first-time buyers who are daunted by today's high prices and may not feel ready to share their personal financial details with a loan officer. Volatile mortgage rates have made it difficult to know how much home they can afford, and their ability to qualify for a loan can change from day to day. BuyAbility is powered by real-time mortgage rates from Zillow Home Loans, and makes updates whenever rates move up or down, or when a prospective buyer improves their credit score, their debt-to-income ratio or saves more for their down payment. 

"Mortgage rates have been on a wild ride this year," said Orphe Divounguy, a senior economist for Zillow Home Loans. "With improving inflation numbers and more balanced economic activity, mortgage rates could ease slightly heading into the new year. That will mean more affordability and more options for home shoppers. Buyers will be in a stronger position to act quickly when the right home enters their BuyAbility, bringing them one step closer to the American Dream of homeownership." 

Shoppers can access BuyAbility from the Home Loans tab on the Zillow app. They enter their basic financial information, including their income, credit score, monthly debt payments, amount saved for a down payment and the amount they're comfortable spending each month. Within seconds, they get their BuyAbility: an estimate of the home price they are likely to qualify for, and a suggested budgeted maximum price based on their desired monthly payments. When they browse Zillow, listings will be clearly tagged when they are within that shopper's BuyAbility, providing instant clarity on whether they are likely to qualify for a loan on that home. 

BuyAbility accounts for the one major factor that basic mortgage calculators neglect: the interplay between mortgage rates and a buyer's personal financial situation. Shoppers with higher credit scores or a lower debt-to-income ratio will qualify for a lower mortgage rate, which has a huge impact on their buying power. Assuming a 20% down payment and a fixed-rate mortgage, a median-income household would be able to afford a $380,000 home with a 7% mortgage rate. That same household could afford the monthly payments on a $420,000 home with a 6% mortgage rate. 

A vast majority of home buyers today are prioritizing budget above all else. Zillow data finds nearly 80% of recent buyers say it is very or extremely important to find a home within their initial budget (79%). That became a bit easier when mortgage rates dropped this fall. New Zillow research finds the share of homes that a middle-income household could comfortably afford hit a nearly two-year high in September. A household making the median U.S. income could comfortably afford 27.3% of homes listed for sale across the country. Only 22.7% of all homes listed for sale were affordable to a middle-income household when mortgage rates peaked above 7% in May.  

That significant shift shows how quickly homes can go from being unaffordable to affordable in today's market. BuyAbility gives shoppers a competitive edge by keeping them up to date on exactly what they can afford at any given time. 

BuyAbility is currently available in every state but New York on the Zillow app and will be coming soon to desktop computers on Zillow's website. 

About Zillow Group:
Zillow Group, Inc. (Nasdaq: Z and ZG) is reimagining real estate to make home a reality for more and more people. As the most visited real estate website in the United States, Zillow and its affiliates help people find and get the home they want by connecting them with digital solutions, dedicated partners and agents, and easier buying, selling, financing and renting experiences. 

Zillow Group's affiliates, subsidiaries and brands include Zillow®, Zillow Premier Agent®, Zillow Home Loans℠, Trulia®, Out East®, StreetEasy®, HotPads®, ShowingTime+℠, Spruce® and Follow Up Boss®. 

All marks herein are owned by MFTB Holdco, Inc., a Zillow affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). © 2023 MFTB Holdco, Inc., a Zillow affiliate.

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SOURCE Zillow Group, Inc.

FAQ

What is Zillow's (Z) new BuyAbility tool and how does it work?

BuyAbility is a real-time affordability tool that provides personalized estimates of home prices and monthly payments buyers can afford based on their financial information, including income, credit score, debt payments, and down payment amount.

How much can a median-income household afford with Zillow's (Z) BuyAbility at different mortgage rates?

With a 20% down payment, a median-income household can afford a $380,000 home at a 7% mortgage rate, or a $420,000 home at a 6% rate.

What percentage of homes were affordable to median-income households according to Zillow (Z) in September 2024?

In September 2024, 27.3% of homes listed for sale were affordable to median-income households, up from 22.7% in May when mortgage rates peaked above 7%.