Zillow Group, Inc. (NASDAQ:Z) RBC Capital Markets Global Technology, Internet, Media & Telecom Conference November 15, 2022 10:00 AM ET
Company Participants
Jeremy Wacksman – COO
Conference Call Participants
Bradley Erickson – RBC Capital Markets
Bradley Erickson
All right. So I have to start with the Q4 EBITDA question because I’m getting this a lot and then we’ll move. I think one of the questions we’ve been getting from investors since you guys reported earnings is does the Q4 EBITDA when you think about IMT, in particular, does that reflect some of the headcount reductions that you’ve spoken to? Or have you maybe set a bit more of a conservative bar there? Maybe if you could just answer that?
Question-and-Answer Session
A – Jeremy Wacksman
Yes. Let me answer that. Right. We took the headcount actions ahead of Q4, we announced and the guide reflects our view of the cost savings coming in the quarter.
Bradley Erickson
Got it. All right. Glad we cleared that up because I haven’t been getting that. So all right, let’s talk market. It’s obviously a very challenging time, sort of on the record I was speaking to, looking past the next 3, 6, 9 months potentially calling out a number somewhere in the neighborhood of 6 million transactions a year being the right number. Why is that the right number, do you think?
Jeremy Wacksman
Yes. And we used that when we gave our midterm targets early this year as a way to kind of frame just the category average, and that’s kind of how we think about it. Obviously, right now, the real estate market is in a very different place than we all thought it’d be even 6 months ago. But if you zoom out and look over the long term, the kind of housing inventory turnover level of around 4%, 4.5% kind of imputes around 6 million homes trading. And if you kind of look historically, there have been peaks and valleys, but that’s 6 million average. That’s part of why we talked on the call about over a 10-year period, thinking about around 6 million homes a year. It’s a way to think about where we’re focused on our share gain in whatever that number is, and that number will be a bit low obviously right now. But over time, we’ve seen it around 6 million homes trade a year, and that’s really a good place to think about how to model it in the long term.
Bradley Erickson
Yes, yes. Okay. And then one other question we get frequently just at a sort of high top-down view. Should your business gain share or lose share or maintain share through the various points in the cycle, maybe both on the downswing and the upswing? Maybe if you could just talk about what investors should assume your business performs like through those cycles?
Jeremy Wacksman
Yes. And we’ve talked a lot about our goal over time is to gain share, to gain share in the industry. And right now, we’re at around 3% transaction share. And so was the 6 million homes that might trade in an average year, right? 4 million of those buyers are on Zillow, using Zillow’s capacity, 1.5 million of them are actually raising their hands, starting a conversation with an agent or the loan officer in some fashion, and we will end up helping a couple of hundred thousand of them.
And so that leaky funnel, growing our transaction share in that leaky funnel is really our opportunity. So up and down, we expect that we will be able to gain share over time. Obviously, it’s important to remember, we’re focused on building these growth pillars we talk a lot about as a way to gain share and we did build. So we’re seeing early signals and early signs of things we like in our growth pillars, but those will really be what helps drive that share gain over time. And that’s why we talk a lot about the ability to do that regardless of what happens to macro, especially given how volatile macro is right now.
Bradley Erickson
Got it. But I guess in the existing business and quarter-to-quarter, like, for instance, PAs held on to spend right through the spring. And so when the market got worse in the summer, it was like, all right, there was a little bit of a, call it, like a catch-up cut, I think, is what we referred to it as. So the growth rates are lower. I guess, on any sort of stabilization or upswing, do you think that comes back faster than the market? Or what would you say? And I understand we’ll get to the share gain piece in a minute.
Jeremy Wacksman
I think it’s hard to forecast. There’s not a closer correlation between advertiser behavior and transactions. But what you’ve seen in the last quarter at least and what you see generally is our strategy of working with stronger and a more enhanced partner network. They have a stronger relationship on us, and we have a stronger dependence on them, that helps them need our customers more in a downturn and in an upturn.
And so a part of what you see anecdotally from our agents is really when it gets tough to run your business, you marginally cut what you need to run your business. And in theory, we’re not the first place because we’re a high source of customers. So it helps us maybe insulate a little bit better and then ease them out on that conversation, as you say, well, over time, the more we’re aligning ourselves with these stronger best converting great customer experience partners, the more they’re going to weather their own down, right? They may have less or different competition in their own market for buyers even if it’s a lot harder to get a buyer. So I think both sides, but our platform, the connections we drive, their ability to spend on this and then their ability to run their business in a downturn, I think, both are effects that happen.
Bradley Erickson
Yes, yes. Okay. And maybe just on that point, talk about — I feel like at this — lately, you guys are sort of — and we’ve heard this in our channel work, you guys are managing ROIs maybe a bit more like the last downturn, mini downturn, we’ll call it, at the end of ’18, early ’19, maybe you took a few learnings from that period. What are you guys doing in terms of actively managing ROIs, lead allocations, throttling spend in various zip codes? Maybe just talk about some of the levers you’re pulling right now.
Jeremy Wacksman
Yes. I mean one of the big things we’re doing — so for a while, there was movement of lead allocation as more flex partners came up, that share of that has relatively stabilized. And again, share against volume. The volume of overall of connections is down, right? While traffic remains strong, and it’s kind of interesting signal that even in a market where people can’t buy [Technical Difficulty] and today’s kind of dreamers are going to be tomorrow shoppers when rates are at 7%. Right now, that connection volume is down. And so ensuring our partners have great ROI, especially in our market-based pricing model is something they care a lot about and when they’re seeing fewer connections and hard-to-convert transactions, those are actions that we’re taking in urgently.
Bradley Erickson
Yes, yes. Okay. So let’s talk about the share gain thesis. I think it was Slide 2. I was congratulating the team on putting together the picture because I think the big — obviously, whatever iBuying — we’ll cut that out of our memories. But as we’ve moved forward here, the big question investors ask is how are you going to get from 3% share to 6% share? We get it, the market maybe 6 million or 3 million or somewhere in between, but the market share gain itself percentagewise is still the same. And so you’ve got these 5 pillars, right? Enhanced partner network, you’ve got Mortgage, you’ve got tours, that sort of thing. We’ll get into some of the details in a second.
But like when are we going to see some of those contributions? How will we see them? And if you had to pick one of them out, and we — like I said, we’ll go into tours in a minute, but just at a high level, what — which ones are going to be the principal contributors? Well, it seems like — and the reason I say that is because real estate being a people-to-people business, right, these things take time to do, seller listings have taken 2 decades and we’re still waiting to some degree. How do these things manifest in your business?
Jeremy Wacksman
Yes, it’s hard to pick just one. And the big reason is because they are related, right? And so we can talk through that. We are — so again, the 5 growth pillars for folks who aren’t as close to touring and helping customers be able to see and tour the home virtually and physically easier and better. That’s sort of more high-intent customers financing, helping customers be ready when they have a financing question, it turns out a large percentage of customers actually start with a financing question, not — I want to go to the house question.
And right now, that’s the capability we’re out building. Seller, a lot of our buyers are also selling. And as you said, it’s — they care a lot about these estimates than they care a lot about how can they maximize their price and what their selling options are. That’s one. And then again, the related part is, all those services need to be offered by Zillow, the platform and our partner and having an enhanced set of partners that are able to scale the operators to offer those services, which are just very different ways of working. It’s no longer just here’s a lead, you figure it out.
Here’s a tour connection, you need someone who’s going to meet them at the door. You have then finance-ready customers, prequalified, talking about pricing. There’s a seller conversation an about how — which selling option is right for you. So like having a partner who can handle all this. So to your first question on, when are we going to see progress? We talked a bunch about giving some early signals on why we’re so excited about these. But they are early. We’re in one market with this kind of new real-time selling experience, and that’s a brand-new workflow for agents.
We’re asking them to work differently with customers. They love it because it’s a higher intent for the customers and the customer loves it because it’s what they want to do, building that out is going to be market by market and same with clients. So there’s a lot of factory and technology build to handle these customers that aren’t as finance ready and through the agent referral and how do you make sure you build the right capability to get the right customer in terms of talking with the loan officer at the right time or let them self-serve when they want. So it’s a long way of saying, you should see product road map progress from us over the next set of periods, and we’ll update you all on what we’re seeing and why we’re excited. We’ll start to do after this call. And then there’s a line from there to the output growth.
Bradley Erickson
Yes, yes. And so maybe if we could isolate because I think it’s Raleigh, where you’ve rolled out the integrated touring product.
Jeremy Wacksman
Atlanta.
Bradley Erickson
Atlanta. Like I said, Atlanta. Thanks. What kind of are your early — I mean how — I know it’s only been out for like weeks — any sort of early learnings you can share in terms of conversion? And also talk about what it takes to get that integrated product set up in the market.
Jeremy Wacksman
So just a little bit of a backdrop. So the way most touring works on Zillow and on every other website, it’s really make a request. The customer thinks they’re booking a tour the way you book a restaurant, but they’re not. They’re saying, okay, the home is in theory available at 9. I’d like to see it at 9 and then it kicks off this data chain of a lot of people, having to coordinate the buyer’s agent, the seller’s agent, the seller. And then if there’s any time mismatch, it all starts all over again.
Bradley Erickson
Yes. And that’s like a phone-based system in the…
Jeremy Wacksman
Phone, text, e-mail, but it just goes back and forth. And ShowingTime, which is a company we bought 1 year ago, is really the reservation system for us, where we, the majority of listing agents manage their showings, but it’s still this asynchronous analog, [indiscernible] based process. So that’s our — the thing the customer wants to do, which is the button they want to click on if they’re serious about shopping. But that’s how, and then what we did was the Zillow team partnered with the ShowingTime team and a set of our partner agents that said, well, what if we — can we not build the OpenTable system? Can we not build it so that we have, a, real-time availability, which ShowingTime and all the listing agents have to provide and they increasingly are providing to say, this is when the home could be available to be seen.
And then when a customer says, “I want to book a table.” We just make it happen. We have a set of agents that work differently that are ready to meet that customer when they want to meet, and they just have to make sure that nothing changed on the sell side, and then we can just say to the customer, “Yes, you’re ready to go.”
And the reason it’s a different workflow is most of the times, we’re just handing that customer to the agent, and they go figure all that out and there’s a breakage. And so your math question, that means that only about 1/3 of the time when a customer says, I want to go see a house, do they actually see that house at that time, right? 2/3 of the time, they don’t. Now great agents are great at still converting that relationship, maybe they’ll go see a different house, maybe list at a different time.
But do the customer, do they want to go to that and have that dinner. And only 1/3 of the time they’re doing that. And so a big blocker of that is the schedule problem. If we can increase the successful tour rate, which is what we talked a little bit about on that 1/3, tours, in general, convert higher, like we convert 3x the other actions that are more success into tours with these agents that we know convert well. So that’s really what the change is. And yes, it’s just one market. It’s just early. It’s early. It’s early data. but we’re seeing positive customer signal, customer side of things. And the other thing we’re seeing is the agent partners we’re working with, it’s a new way of working, but they really like the conversation and the lead quality that they’re getting. So that’s why we’re pretty excited about.
Bradley Erickson
Got it. Is it a stretch — I mean, yes, you’ve given the 3x conversion metric several times in the public domain? As you — you’re — it sounds like you’re focusing on agents, right? Before it was ShowingTime, it was like a lot of — I mean, pretty much MLSs, right were buying it entirely. I think as you’ve rolled this out, I thought you’re rolling it out with selective agents, right? And so I guess 2 sort of wonders, I have. One, are you seeing conversion ahead of 3x because you’re working with a better-quality agent?
And two, are you like — I know you’re probably not doing anything today, but what’s — I mean, there’s obvious price implications, right? You’re producing a much higher ROI lead. How should we think about that affecting the auction, willing to spend in particular ZIP codes to get access to these types of leads?
Jeremy Wacksman
Well, one important clarification first, let me talk about [indiscernible]. The ShowingTime strategy has been and is software for the entire industry. So ShowingTime powers sellers, brokers and all those agents and that’s a really good thing for the industry. And a lot of what we offer, we want to maintain open and let anyone either use or buy. And again, the big rationale for Zillow benefit is, if listings are more Internet-enabled, if transaction management is digital, it sort of makes the digital transaction easier.
Everyone in the industry benefits, obviously, we’re very big, so we do it as well. So that will maintain the strategy. You’ll see things like dotloop, things like ShowingTime appointment center, those will continue to be offered everywhere because we’d like to just have the Internet be part of the transaction.
So then for the subset of agents that want to work with Zillow customers, yes, there is obviously, a lot of benefit if we can align our customers with higher customer satisfaction converting agents. There’s a lot of benefit if those folks can get customers who are further along on their journey, but it’s more about like which door do they want to go through. And so it’s really early to try and draw a line through what’s the revenue potential of that versus why you [indiscernible] a few weeks. But our hope is, in fact that this is what really drives the share gains. If you think about that getting up from 3% to 6%, touring is a big piece. The partner network is a big piece. Financing is a big piece.
Bradley Erickson
Got it. So you’d presumably over time, as you get more data, you’d aim to keep the ROIs roughly the same with where you’re at today or improve them per agents? Or what, I know that’s a hard question to answer.
Jeremy Wacksman
Yes. I mean I think the challenge there is lead quantity, quality changes over time, transaction participation changes over time. That’s why we kind of talk about number of transactions and revenue per transaction. We want to see more number of transactions. And we do want to see more revenue per transaction. That largely comes from additional services like mortgages. But they’re both components of the growth.
Bradley Erickson
Got it. And then, I guess, one last one. Just how do you think about lead allocation and mix shift between sort of traditional connections and then these touring leads? And yes, what’s that mix look like today? What does it change to? And then how do you allocate those leads over time?
Jeremy Wacksman
Right now, we’re too early to think about how it will work over time. We’re just trying to think about can we get partners in a market for all the doors they come through to know how to work with the customer. In the very long term, you could think about there are primarily 3 actions a customer wants to take. They want to go see a house, they want to get a financing question answered or they want to think about how to sell before they buy. And those different doors that a customer goes through, we want to have great customer experiences for them. And those will all be, leads the agents in different fashions.
How we think about how to help them manage that and how we think about distribution, are too early to tell, other than relying on enhanced partners who can help work across that strategy, right? They are going to be very different experiences for very different reasons. And then there will be higher-intent customers behind that, but it won’t be a one-size-fits-all. And really, for us, it’s about making sure they can handle and build the right systems for that, do a great job, work really well. and then we’ll kind of figure out how to actually allocate and deal with it.
Bradley Erickson
Got it. And then one question I get a lot is like, hey, isn’t Zillow sort of like fully baked in terms of agents, right? Like you guys kind of — like you’re a good agent in this country, you probably work with Zillow, right? You’re probably a Premier Agent. I don’t think that’s — so E times Q, they kind of — you want a runway for growth in the Q. I think in this case, it’s a little bit [Technical Difficulty] why is that? And actually, could you make a case that the business gets better over time if the queue comes down, maybe just…
Jeremy Wacksman
From an agent count standpoint?
Bradley Erickson
Correct. Yes or PA credit cards, if you will.
Jeremy Wacksman
Yes. One point is the idea that as scaled team leads, build their business, that is 1 account for Zillow and then you have many agents there training, developing, helping build their careers. And so that’s part of why the number of accounts isn’t as greater. And that is why we sort of stopped talking about a long time ago.
But you’re right, our goal is find the best partners, and the best partners might be smaller or bigger teams. And the most interesting thing about our great partners is there’s not just one-size-fits-all approach, right? They work for all different brokers. They have all different types — ways of figuring out how to be a great phone-based converter, an in-person-based converter that spoke to their region and they’re home price type.
And so — but you’re right in that — you’ve heard us talk a lot about quality and trying to get to the best agents. And that is because those folks typically they’re great at what they do, they convert well. And those that kind of want to scale their business and teach others how to do that, that helps us have them help a more lot of customers. So we are very focused on — we talk about it a lot, an enhanced partner network, which doesn’t mean volume. It means volume of transactions maybe from a more concentrated set of people.
Bradley Erickson
Got it. Have you seen — and maybe a follow-up there. Have you seen early signal that you can run that strategy where you sort of compress, but raise the quality and you can actually effectively be accretive in a market like you can do more revenue in that particular market?
Jeremy Wacksman
I mean it’s just too early to say, but you’ve definitely seen us talk about our excitement and the green shoots we’re seeing with the places where we’ve aligned around a set of partners. We have some of these test markets where we’ve really cleared the other weather set of partners that we’re liking the early signals we’re seeing there. So it’s too early to answer the math question — but it’s clearly our strategy and it’s our strategy because we think it’s a customer benefit and a partner benefit, back to your P times Q. In theory, both of those get better but that strategy is right.
Bradley Erickson
Got it. Okay. And then I’ll open it up for a minute. Questions from the audience. Anybody? No. Lively crowd. no? All right. Just on the enhanced partner network. I think one of the things — and we picked up on this on our checks back 6, 9 months ago as you guys are — you’re starting to get the prepaid agents, market-based pricing agents, MBP, for those who don’t know all the acronyms in the audience. You’re starting to get those agents to provide a feedback loop to you for the first time, which I think is really and you’ve seen some other lead gen companies where if you don’t have sort of a full view of attribution, it gets hard, right, and you don’t necessarily know the ROI. What are you learning from that process? And again, kind of to the same question of tours, what effect can that have on your pricing for lead cost, if you will?
Jeremy Wacksman
The feedback loop point, I mean, that goes back to we’re just trying to find and work with the best partners almost regardless of pricing model. So we get asked a lot of questions about price model, but that’s really in our test markets having a pricing model that aligns their success with ours. It’s just helpful for testing because we’re innovating, we’re asking them to do a lot. But over time, our strategy is just find a good partner, so that’s converting high CSAT. And in our prepaid model, we had not and don’t have as many feedback loops, so starting to get that data just helps us think about how to curate the partner network and make sure we’re aligning ourselves with the best partners.
I think it’s way too early to say whether that data would work differently than the data in postpaid but the general strategy is we’re no longer just handing a customer over to an advertiser and saying, good luck and one-size-fits-all and it doesn’t matter whether it was a tour or a pre-approval or a seller inquiry, like you figured out. This is how you should work and that requires data sharing in both directions as far as us to share more about the customer that requires them to share more about how it’s going. So like we’re excited about that strategy across all agents really kind of regardless of [indiscernible].
Bradley Erickson
Yes. Okay. And just curious on that point, like, are you — are you getting a meaningful amount of agents? Like are you getting enough data feedback loop to be able to sort of work with that change really early?
Jeremy Wacksman
I would say just kind of stay tuned. But again, it’s aligned with our strategy. Our goal is — and it’s not just — it is about making sure as we start to build these more bespoke experiences because we have the right data sharing back and forth, that’s really what we’re after at.
Bradley Erickson
Got it. Not that early. We’ve heard about at least years ago. All right. And then just in terms of utilization. So I don’t know, back before you stopped publishing at 20 million leads, give or take, I know it’s probably lower than that given the market right now. But 15million, 20 million, 25 million leads, something like that. What portion of those leads do you think you could do better with effectively, meaning like you spin off all this value, is the way I think about it and you only get paid for maybe a portion of it, a small portion of it. How much with all these processes and mechanics you’re working on product-wise, how much could that improve over time proportionately relative to total leads, for example.
Jeremy Wacksman
Yes. And the way we think about that is actually less the lead denominator and more kind of the actual transaction denominator, which you talked about earlier. Again, the [Technical Difficulty] I know that customer wants today actually end up buying, but we gave some data earlier this year, where if you actually look at the people who actually end up buying a home, how many of them are on Zillow, how many of them then use Zillow to sort of and then how many we transact with that, that 4 million people, 1.5 million are some form of a connection lead in some fashion across a set of things. Out of that how many do we actually convert with our partners. That gap is why we get so excited because we — and a big part of that gap, touring was a good example.
I mean what costs that gap? Well, that 1/3 fulfillment rate causes some of that gap. And not having that answer at the right time for that customer is the right gap. Like the partner didn’t pick up the call. Like there’s a bunch of reasons that the gap happens, that you feel excited about being able to close with these growth pillars. So we think it can be far higher, which is why we’ve talked a lot about our share gains and our share gain is not coming from having to drive dramatically more share of audience.
Again, where 60%, 70% of the Internet is using — or the real estate Internet is using Zillow in some fashion and that 4 million buyers there, they’re there and their traffic remains healthy because we provide these great experiences and we can provide even better experiences. In theory, that gets them to raise their hands in a higher quality fashion, maybe it helps more than raise hands, but it ultimately helps us just convert more people.
Bradley Erickson
Yes. Got it. And then just on the — we haven’t really talked about Flex. And I know this is one thing, I think, that’s been confusing for some of us to understand the strategy there. You guys are kind of agnostic essentially as to MBP versus Flex. It’s just a matter of rolling up the transaction better. As you — you’re testing these markets where you’re Flex-only in some cases, is that proving to be a better mechanism for certain aspects of rolling up the transaction, all of it? And then I guess the question becomes, do you look to transition more markets? Does it make sense to be hybrid and offer both prepaid and postpaid in markets? Like what are early learnings?
Jeremy Wacksman
Yes. And you’re not going to like — [Technical Difficulty] that’s really the answer. We are mostly — both models exist in most of the country for a reason. And then in these test markets, the reason we went through only Flex in the test markets was just to create frankly, a clean room to test with. And again, we’re trying things for the first time. We’re asking agents to invest their capital, their time to try to do things that might not be going to work. And so having a postpaid model to align our successes to let them innovate with us, we felt like we did. The hope is that, again, back to what’s the strategy? The strategy is when we figure out touring at scale, we figure out financing at scale, seller at scale, it’s just about the best partners. It’s just partners who want to win over those customers. Monetization model is not an input. It’s an output, maybe. But we don’t know for sure. It’s why we’re testing right now. And our goal for sure will be to build these growth pillars to get you as many customers as we can and as many great partners as we can.
Bradley Erickson
Yes. Yes. Got it. So maybe just a quick one on mortgage. We just have a few minutes left here. Rich has talked about a lot of the sort of obvious attach rates and signal you get from people around searching for a mortgage or a loan form fill out on the site. What — mortgage seems like a hard product to develop from a digital perspective. I think some others have not — in the market have not done a great job. Where are you guys on that do you think? And frankly, much of that is — how much of that expense is in front of us, right? Like have you guys made a lot of those bigger investments on developing the mortgage products or are we going to sort of see that persistently into ’23?
Jeremy Wacksman
Yes. I mean mortgage, you’re right. It is — it takes a lot to build and for us to build a mortgage experience that can work with direct-to-consumer and kind of finance transaction-ready, out touring with agent customers. And those are really our 2 biggest doors. Back to, you said we talk a lot about 40-odd percent of customers actually want to start with financing and my guide is that number goes up, while importantly it’s more challenged. And then a lion’s share want to start with the property.
And how those 2 cohorts of customers behave in a mortgage expanse is going to be different, right? So a lot of the technology build is being ready and willing and able to take the customers who are asking earlier stage questions and build technology to help them when they’re maybe not ready to get the loan written and they aren’t making offers yet. And they may — and then also develop technology to let them seamlessly get preapproved, get a question answered from a loan officer, be able to start writing offers on a house with an agent.
So the technology build that we — in earnest, really started over the last year or so as we wound down ZO. Because if you remember, a big part of the mortgage strategy originally was build that as a payment mechanism like Zillow Offers. So we built a factory that we plug right into Zillow Offers and now we’re building the direct consumer integrate with agents. So there’s a lot of work to do there.
We’re really excited about the progress and the early returns we’re going to see with our customers. That’s — and you’re right, it’s the novel part is that. But what we’re excited about is the mortgage is effectively a commodity. [Technical Difficulty] distribution and sell off of that loan product that needs to get build for sure, that needs to get build with these [indiscernible] but the novel part, the interesting part is having the brand and the customers ready to go and the CAC advantage that Zillow has for that and having a partner network that hopefully can serve as a great referral channel and a great distribution channel for our mortgage with our shared customers.
Those are the two assets that I think make the mortgage industry the hardest to be in. Those are two assets that we have. So if we can build the capability, we love the ability to plug it into those two things. And again, we see that that’s what the customer wants, and we see that’s what the partner wants. I get that’s pretty exciting.
Bradley Erickson
Yes. Got it. Okay. Last couple of minutes, I guess, I have to ask like maybe one or two financial questions. I mean, a, I know conceptually, you guys have a lot of product work in the pipeline that’s pretty exciting over the next few years, speaks to the thesis. Are we going to see any of this show up in the P&L in ’23? I think that’s what people are sort of wondering.
Jeremy Wacksman
That’s part of why we talked a lot about, think about next year as rollout and road map. And the reason we said that is because we — this is invention. We don’t know how fast it’s going to go and we’ll give you all signals that we’re seeing from those rollouts but you need to see rollouts and then scale to then see [Technical Difficulty] in the P&L. So it’s definitely not a linear walk from here to the [indiscernible].
Bradley Erickson
Got it. And then lastly, just best guess on markets because I know you know where interest rates are going, obviously, that’s self-evident. I think existing home sales, we printed a 3.8 a few weeks ago. The pendings are pointing to more of something more in like the 3.5 range right now. I mean, at current levels, like can it get worse?
Jeremy Wacksman
I mean we’re — we talked about it on the call, we’re expecting it to be choppy for a little while. We’re not expecting some magic to get better. We don’t know. No one can forecast where it’s going. The 2 things that I think are new is — I mean, obviously, affordability is challenged. We talk about that. You do the math on like pre-pandemic to now. Those percentages were pretty crazy for a while. Like how much more the mortgage is, how much less affordable, so how much of course is volume is out there, right? That’s all crazy. But the volatility is also, right?
So the — and the volatility between the 10 year and the 30 year, I think why we [indiscernible] so we’re trying to forecast what happens there and will it get less volatile and therefore, will some of the some of the edges of what’s driving the change. It’s hard to know. We’ve definitely said we expect it to stay choppy for a little while, which is why we took the cost actions we did, but it’s why we’re also trying to be measured in investing in our growth pillars.
Again, like we talked a lot about, we see the share gain there as an opportunity and also what your print is on the transactions. And we also see our partners wanting to align with us more closely in a market where a lot of the rest of the industry might be challenged, right? And then again, that — let’s not go back to that. We are working with the best set of partners. They are really great at what they do. And they hopefully partner and want to partner with us more and we want to partner with that more. And so while you’re buttoning down the hatches for the rain, like that’s a great place to be, that’s a great strategy to have.
Bradley Erickson
We are out of time. But Jeremy, thanks so much for being here. Good to see you.
Jeremy Wacksman
Thanks for having me.
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