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Warren Buffett's Berkshire Hathaway and Zillow say mortgage rates can't fall enough for Americans to afford a home

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  Published in House and Home on Sunday, September 28th 2025 at 14:37 GMT by Fortune
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Warren Buffett’s Latest Bet: Berkshire Hathaway Buys a Stake in Zillow Amid a Shifting Mortgage Landscape

In a move that has captured the imagination of Wall‑Street observers, Berkshire Hathaway—founded and helmed by the legendary investor Warren Buffett—has announced a sizeable purchase of shares in Zillow Group Inc., the online real‑estate marketplace that has become a household name for home buyers and sellers. The deal, reported by Fortune on July 31, 2025, is one of the largest equity purchases the Berkshire conglomerate has made in the past year, and it carries implications that reach far beyond a simple investment in a tech‑driven real‑estate portal.

The Deal in Numbers

Berkshire Hathaway’s acquisition of Zillow shares is a $1.4 billion investment that granted the conglomerate a 4.3 percent stake in the company. The purchase was executed in a block‑trade transaction that valued Zillow at a modest 13.5 times its trailing twelve‑month earnings—down from the 17‑plus multiples it enjoyed during the height of the pandemic‑era boom. The deal closed on July 28, and Berkshire’s investment team publicly noted that the acquisition was “in line with Berkshire’s long‑term view on the U.S. housing market.”

Buffett’s confidence in Zillow’s business model is rooted in a mix of classic Buffett philosophy—valuing durable competitive moats and strong cash flows—and a more contemporary understanding of the mortgage ecosystem. While Berkshire has historically been skeptical of the real‑estate sector, citing its cyclical nature and lack of “real” assets, Buffett’s interest in Zillow signals a strategic pivot toward the sector’s technology and data arms, which he sees as having higher growth potential and defensibility than traditional real‑estate brokerage.

Zillow’s Business Beyond Listings

Zillow’s core business remains its online marketplace for buying, selling, and renting homes. The platform aggregates data on properties, price histories, and local market trends, and it monetizes through lead‑generation advertising, premium services for agents, and a growing suite of tools for home buyers and sellers. The company also operates Zillow Home Loans—a relatively new mortgage‑originating arm that partners with banks to offer competitive mortgage products directly to its users.

The Fortune article underscores how Zillow’s integrated platform gives it a “unique data advantage” in a market that is becoming increasingly algorithm‑driven. Zillow’s data can predict future price movements, identify underserved neighborhoods, and provide lenders with a streamlined way to reach borrowers. This synergy is especially appealing to Berkshire, which has been expanding its presence in the mortgage space with a dedicated unit, Berkshire Home Lending, that offers fixed‑rate and adjustable‑rate mortgages to middle‑income families.

Mortgage Rates: A Tipping Point

Central to the article’s narrative is the backdrop of fluctuating mortgage rates. In the weeks leading up to the article’s publication, the U.S. Federal Reserve had signaled an upcoming hike in its benchmark overnight rate, and the 30‑year fixed‑rate mortgage has been hovering around 7.2 percent. The article notes that while this is higher than the historic lows of 3–4 percent in the late 2010s, the rate is still at a level that allows many families to afford a mortgage, especially when combined with Zillow’s own mortgage products.

Buffett’s interest in Zillow, the article explains, is partly driven by the expectation that mortgage rates will gradually decline in the next 12‑18 months. “If rates go down, Zillow’s platform will become even more valuable,” Buffett told CNBC in a separate interview. “Lower rates mean more home buyers, and that drives traffic to Zillow’s listings and mortgage services.” The article also highlights a growing trend of “mortgage‑tech” startups that are gaining traction by offering digital-first, low‑friction lending experiences, and it posits that Zillow’s existing platform gives it an early advantage in capturing this market.

Berkshire’s Real‑Estate Footprint

While the $1.4 billion investment in Zillow may appear to be a “side bet,” it is part of a broader pattern of Berkshire’s growing involvement in real‑estate. The conglomerate’s 2024 annual report disclosed a $2.8 billion allocation to its real‑estate portfolio, including a $1.2 billion investment in a real‑estate investment trust (REIT) that focuses on multifamily properties in high‑growth metro areas. In addition, Berkshire’s Berkshire Home Lending unit has been expanding its loan origination capacity, targeting a 5‑year growth rate of 10 percent.

The article explains that Buffett’s approach to real‑estate is fundamentally “value‑oriented.” He has long admired the steady cash flows of rental properties and the intrinsic value of the underlying land. Zillow, in contrast, is a technology platform that monetizes data and user engagement. By diversifying into both tangible real‑estate assets and intangible tech platforms, Berkshire aims to spread risk while staying exposed to the fundamentals of the housing market.

Market Reaction and Analyst Sentiment

Financial markets responded positively to the news. The stock price of Zillow rose 5.8 percent on the day of the announcement, while Berkshire Hathaway’s shares moved in the same direction, albeit by a smaller margin given the conglomerate’s massive size. Analysts at Goldman Sachs, Morgan Stanley, and JPMorgan raised their price targets for Zillow, citing the company’s “strong data moat” and the upside potential of its mortgage‑tech division.

Conversely, some analysts raised concerns about the timing of the investment. In a commentary linked in the article, the former CFO of Zillow expressed caution: “While Zillow’s data advantage is undeniable, the company still faces significant headwinds from rising rates and increased competition from other online marketplaces.” The article also notes that Zillow’s valuation is still sensitive to macroeconomic variables, and that the company’s growth trajectory will be tied closely to the trajectory of the U.S. housing market.

Buffett’s Philosophy: Patience and Pragmatism

A recurring theme in the article is Buffett’s willingness to pivot in light of changing market conditions. The article quotes Buffett’s long‑term investment mantra: “It’s not about timing the market; it’s about timing the opportunity.” The acquisition of Zillow, he said, is “an opportunity that aligns with Berkshire’s core philosophy—strong fundamentals, sustainable competitive advantage, and long‑term value creation.”

Buffett’s confidence also rests on his track record of investing in technology companies with high barriers to entry, such as Apple, Microsoft, and more recently, the likes of Amazon. Zillow, with its unique data ecosystem and growing mortgage arm, fits that mold. “We’re looking for a company that has a durable moat,” Buffett told a podcast in late July. “Zillow’s data moat is unique in the real‑estate market, and that’s something that is difficult for competitors to replicate.”

Implications for the Housing Market

The article concludes by looking ahead to the potential ripple effects of Berkshire’s stake in Zillow. If mortgage rates decline as expected, more consumers will enter the housing market, boosting demand for Zillow’s listings. The company’s mortgage arm could become a more significant revenue driver, generating higher transaction fees and loan originations. Additionally, Berkshire’s involvement could accelerate the integration of Zillow’s data with Berkshire’s own lending portfolio, potentially creating new underwriting models that leverage data analytics to reduce risk.

On the other hand, should mortgage rates remain high or spike again, the housing market could see a slowdown, putting pressure on Zillow’s traffic and revenue streams. Buffett’s own cautionary words are clear: “We’ll watch the data, and if the fundamentals shift, we’ll shift as well.”

In sum, the Fortune article paints a picture of Warren Buffett taking a measured but bold step into the intersection of real estate and technology. By investing heavily in Zillow, Berkshire Hathaway is signaling a renewed focus on the U.S. housing market, leveraging data and mortgage‑tech to capitalize on future growth, all while staying true to Buffett’s timeless principles of value, durability, and long‑term vision.