Over the past week, third-quarter earnings, home sales and home price reports have been coming in like hotcakes. If you’ve been unable to keep up, no worries — Inman’s rounded up the results of third-quarter earnings calls from brokerages and companies including Redfin, Zillow Group and News Corp.
We’ve also gathered the latest market trends reports to see how homebuyers and sellers fared during the third quarter.
Seattle-based high-tech brokerage Redfin on Wednesday released its third-quarter earnings, which included $239 million in revenue and a gross profit of $53.4 million.
According to a previous Inman report, Redfin CEO Glenn Kelman said his brokerage’s success is due to increased investments in disruptive technology, better services, and other programs, such as instant cash offers. These strategic moves helped the brokerage once again beat experts’ revenue expectations two quarters in a row by $8.89 million and $7.41 million, respectively.
“These are big strides toward our long-term goal of redefining real estate in the consumers’ favor,” Kelman said of Redfin’s success. “I feel reasonably good about next year.”
“Hot dang, I think we’re going to do pretty well,” he added before concluding the call.
Read Redfin’s full earnings report here.
EXp World Holdings
eXp Realty parent company EXp World Holdings brought in $282 million in revenue during Q3 2019, an 80 percent boost in revenue from Q3 2018. Losses for the company stood at $1.8 million — down from $4.6 million in the previous year.
The company also beat adjusted loss per share and revenue expectations by $0.06 and $8 million, respectively.
EXp World Holdings CEO Glenn Sanford attributed the company’s growth to its ability to “attract and retain” agents. EXp’s agent count increased 66 percent year-over-year to 23,034, resulting in a 66 percent growth in transaction sides from Q3 2018 (38,567).
Transaction volume soared 79 percent year-over-year to $11.1 billion.
“Rapid growth of eXp Realty continued this quarter,” eXp World Holdings CEO Glenn Sanford said in a statement. “The most agent-centric real estate brokerage on the planet is increasingly attracting and retaining agents who want the freedom, convenience and control over their long-term destinies that our unique model provides. We remain laser-focused on delivering an exceptional agent experience, which enables our agents to accomplish what they set out to do with their businesses.”
Read eXp World Holding’s full earnings report here.
RE/MAX raked in $71.5 million in revenue during this quarter, which ended for the company on Sept. 30. In addition to increasing revenue by 30.4 percent year-over-year, the company reported a net income of $9.2 million — a $1 million increase from Q3 2018.
RE/MAX beat adjusted loss-per-share and revenue expectations by $0.02 and $860,000, respectively. Lastly, the company said its total agent count increased 3.5 percent to 128,258 during Q3 2019.
However, most of that growth can be attributed to teams outside the U.S. and Canada, which experienced a 15.7 percent boost from last year.
RE/MAX CEO Adam Contos said he expects RE/MAX’s momentum to carry into the fourth quarter as the company continues to reap the benefits of its newly-launched end-to-end platform, booj, and an overhauled consumer-facing website and app.
“The successful launch of our booj technology platform, greater stability in U.S. agent count, continued double-digit growth in international agent count, and ongoing Motto Mortgage expansion were third-quarter highlights,” Contos said in a statement.
Read Re/Max’s full earnings report here.
Although News Corp. faltered during the third quarter with a 7 percent decline in revenue from Q3 2018, realtor.com’s parent company, Move, managed to increase revenue by 4 percent year-over-year.
Realtor.com experienced an 18 percent year-over-year increase in traffic, which translated to 71 million visitors during the quarter. News Corp. CEO Robert Thomson called realtor.com a “tremendous property” while noting the site’s traffic is growing faster than Zillow and Trulia.
“We’re at a very early stage of the evolution of the digital real estate market in the United States, and as it evolves those margins will increase,” Thomson said of realtor.com’s potential.
While things are rosy at realtor.com, News Corp.’s overall revenue from its digital real estate services declined 7 percent year-over-year to $21 million due to “pronounced currency headwinds” and a “particularly sluggish Australian economy and property market” that hit Australia-based REA Group hard.
Despite a lackluster performance this quarter, News Corp. seemed to find hope in Opcity, the real estate lead generation technology platform they acquired for $210 million last October.
“The increase in real estate revenues, which represent 80 percent of total Move revenues, reflects the acquisition of Opcity, growth in audience and higher lead volume,” a company statement read.
Read News Corp.’s full earnings report here.
Although housing affordability improved modestly in the third quarter thanks to lower mortgage rates, sellers still have the upper hand in today’s housing market.
According to the National Association of Realtors’ Metropolitan Median Area Prices and Affordability report, home prices rose in 93 percent of all U.S. metro markets during the third quarter.
The median cost of a single-family home rose 5.1 percent year-over-year to $280,200. A handful of markets, including Montgomery, Alabama; Spokane Valley, Washington; and Salt Lake City, Utah, experienced median home price increases as great as 12.6 percent.
Meanwhile, some of the most expensive markets experienced small decreases in home costs. But, those decreases haven’t improved affordability for the majority of buyers — the median home price in San Jose decreased 4.6 percent year-over-year to a (still whopping) $1.24 million.
NAR Chief Economist Lawrence Yun said home price growth is expected to boom, as supply continually fails to meet demand.
“Incremental price increases are to be expected, but the housing market has been seeing re-acceleration in home prices as more buyers want to take on lower interest rates in the midst of insufficient supply,” Yun said. “Unfortunately, income and wages are not rising as fast and will make it difficult to buy once rates rise.”
Realogy, the nation’s largest real estate holdings company with brands such as ERA, Coldwell Banker and its own-side brokerage NRT, reported a net loss of $70 million in Q3 2019 — a complete 180 from the company’s Q3 2018 performance where they raked in $103 million in profit.
Realogy primarily attributed this quarter’s results to a $180 million goodwill impairment at NRT. The impairment doesn’t impact cash flow, a spokesperson explained to Inman, but reflects an adjustment in NRT’s total value based on the current market.
Realogy has been on a stock market roller coaster this year, with the first significant drop happening in July after the company announced a lawsuit against Compass for alleged “unfair business practices and illegal schemes.”
Realogy’s stock tumbled to $5.87 per share and continued to fluctuate between the four and six-dollar range as the company announced several changes, including a deal with Amazon and the discontinuation of an affinity program between Cartus and the United States Automobile Association (USAA) for military members.
Despite those setbacks, Realogy has kept rolling out new programs, including upgraded agent training tools, a revamped iBuyer platform and a handful of product launches. The company also made significant progress in cutting costs — it’s $26 million away from a cost-cutting goal of $70 million.
“In the third quarter of 2019, we leveraged the strength of Realogy’s size, scale and brands to grow our agent base, launch three new high impact products, and introduce two new high-quality lead generation programs,” Realogy CEO and President Ryan Schneider said in a statement.
“We are energized by our new products and partnerships, which we believe will win more listings, attract more agents and franchisees, and drive growth,” he added.
Read Realogy’s full earnings report here.
Zillow Group’s revenue soared to $745.2 million during Q3 2019, a $402.1 million increase from Q3 2018. The company also reported an impressive quarter-over-quarter increase of $150 million to $343.1 million.
The company beat revenue expectations by $28 million, and experienced significant revenue growth in its Zillow Homes ($248.9 million to $384.6 million), Premier Agent (+7 percent y-o-y to $335.3 million), and mortgage segments (+40 percent year-over-year to $25.3 million).
However, Zillow Group’s net loss exploded from $492,000 in Q3 2018 to $64 million in Q3 2019. The company attributed its booming revenue and net losses to its Zillow Offers program.
This quarter, more than 80,000 homeowners requested an offer, which resulted in Zillow purchasing 2,291 homes. Zillow sold 1,211 homes during the same time period, and experienced an average loss, after interest expenses, of $4,826 on each home — a $1,910 increase from last quarter.
“Our third-quarter results were strong, demonstrating that Zillow Group’s business model expansion to mechanize real estate transactions is gaining traction as consumer demand reveals people want a better, simpler way to buy, sell, rent and finance homes,” Zillow co-founder and CEO Rich Barton, said in a statement.
“Our core Premier Agent business is strong, with record revenue that exceeded our outlook,” Barton added. “The profitability of our Premier Agent business is foundational to Zillow’s success and is the reason we are able to expand Zillow Offers with such confidence and speed. This quarter’s results illuminate how Zillow Group is in the most favorable position to lead real estate 2.0.”
Read Zillow Group’s full earnings report here.
Brokerage recruiting efforts
During Realogy’s earnings call, CEO Ryan Schneider said the industry experienced a “substantial decline” in agent recruiting intensity during September and October.
“This is by far the biggest change in the competitive environment to our benefit that we’ve seen in the past two years,” Schneider said. “All the disruption was coming from one financially disruptive competitor, especially at the high end,” Schneider added later, as an allusion to Compass. “Something changed in the ecosystem and I believe it’s [an] investor focus on profitability.”
Schneider explained his statement was based on “anecdotal [evidence] from people in our field” and data from more than 240 multiple listing services.
The CEO went on to explain that while he cannot predict what other brokerages will do in terms of attracting and retaining agents, Realogy will remain dedicated to growing its agent base without making “unprofitable decisions.”
“And so while we cannot predict what other companies will do in the future this is by far the biggest change in the competitive environment to our benefit that I have seen in the last two years,” he said. “During this whole time we’ve stayed focused on recruiting profitable agents and not making unprofitable decisions.”