BrokerageReal Estate

Anywhere Real Estate cuts costs as housing market falters

Commission costs and retention rates still remain at historic highs

The impact of high mortgage rates and fewer transaction sides took its toll on Anywhere Real Estate in the second quarter, the company’s first since the rebranding from Realogy Holdings. And the market is slowing further, executives said Thursday.

The real estate brokerage conglomerate posted $2.1 billion in revenue during the second quarter, down 6% – $134 million – from the second quarter of 2021. Net income came in at $88 million, down from $141 million at the same time last year, and EBITDA was $202 million, a drop of 34% from the same period in 2022.

During a call with analysts on Thursday, Anywhere executives took note of the larger headwinds ahead but argued they have a business built to make money in any market environment.

“Even in a much tougher housing market, Anywhere delivered the solid profitability and free cash flow that we believe the market is increasingly valuing,” CEO Ryan Schneider said in a prepared statement. “Anywhere continues to invest in the business, especially our strategic focus on simplifying and reimagining the home buying and selling experience for consumers as we leverage our strong financial profile and demonstrated ability to deliver results.”

In the second quarter, the company’s overall closed transaction volume decreased 6% from the second quarter of 2021. Still, Anywhere Advisors’ (formerly known as Realogy Brokerage Group) agent count grew 6% year over year and gross agent commission splits rose 236 basis points from last year, adding to costs.

Operating EBITDA declined $34 million year over year, primarily due to the partial sale of the title business, and a $10 million decline in earnings at its mortgage joint venture with Guaranteed Rate.

“Based on what we see today, our current view on transaction volume for the second half of 2022 is down about 10 to 20% year over year, which implies pull your volume down 6 to 11% year over year,” CFO Charlotte Simonelli said on the earnings call.

Simonelli noted the company has been “relentless” in controlling costs, shedding office space, and is targeting a $140 million savings in 2022, largely in brokerage and title businesses.

Schneider told analysts on Thursday that two years of double-digit price increases have come to an end. Although the second quarter still saw 11% price growth, that trend “has now changed,” he said.

“Overall price for open contracts in June and July is up only in low single digits. In our July open contract data we see price still up in most markets, with substantial moderation from the previous trend – E.G. prices up about 5% in places like New York City, Texas and California, prices flat in places like Florida and New Jersey.”

Schneider said that new contracts in June were down 20% from the same time last year. Anywhere Brands, the franchise group, recorded 263,000 closed homesale sides in the second quarter, down 18% from last year. Anywhere Advisors recorded 96,029 closed homesale sides, down 8% from the same period last year.

“The most consistent feedback I’m hearing when talking with agents and franchisees – and looking at our data – is the speed at which change is happening,” Schneider said. “Whether you’re talking about buyer demand and expectations, seller expectations, or increased creativity getting deals done.”

He continued: “Looking ahead, the housing market volatility, the pace of change and potential additional Fed actions together make it pretty tough to forecast the rest of the year.”

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