Why Zillow is worried about America’s housing market shakeup

Shares of Zillow have dropped nearly 20% since Thursday as investors feared that lower commission rates for agents could lead to less business for the real estate platform.

A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link. Since its founding nearly two decades ago, Zillow has revolutionized the way Americans buy, rent, sell — and fantasize — about housing in the US. But a settlement that breaks the grip of powerful real estate agents could trigger a range of problems for the platform already suffering from declining traffic in an increasingly competitive housing market. The company’s stock has dropped nearly 13% since Friday’s $418 million settlement between the National Association of Realtors and groups of home sellers which ended the standard 6% commission for Realtors. It’s a sign that investors fear the settlement could have seismic effects through the housing industry, changing everything from how much Americans pay to buy and sell homes to the income of those in the industry and even the technology underpinning it. Zillow made this point itself in its annual report last month, when the company warned that, “if agent commissions are meaningfully impacted, it could reduce the marketing budgets of real estate partners or reduce the number of real estate partners participating in the industry, which could adversely affect our financial condition and results of operations.”