The operator of Berkshire Hathaway HomeServices saw net income from real estate fall 75 percent year over year, according to earnings released at so-called “Woodstock of Capitalism” this weekend.

Berkshire Hathaway, the parent company of Berkshire Hathaway HomeServices, saw income from its real estate brokerage business plummet in the first quarter of this year, thanks in part to a slowing mortgage market.

After-tax net earnings from the company’s brokerage business clocked in at $21 million between January and February of this year, according to an earnings report over the weekend during the so-called “Woodstock of Capitalism” at the annual Berkshire Hathaway shareholders meeting in Omaha, Nebraska. That’s down 75 percent compared to the same period one year prior, when Berkshire Hathaway earned $84 million from its brokerage business.

Berkshire Hathaway is a massive conglomerate that owns everything from railroad businesses to insurance providers. Some of the company’s holdings, such as Fruit of the Loom, are well-known consumer brands. Thanks to CEO Warren Buffett and his reputation as a savvy investor, Berkshire Hathaway is among the most closely watched publicly traded firms in the world.

Overall, Berkshire Hathaway’s net income came in at $5.46 billion for the first quarter of 2022. That was down from more than $11.7 billion during the first three months of 2021.

In the real estate world, Buffett’s company is best known for operating the brands HomeServices of America and Berkshire Hathaway HomeServices, which came under the Berkshire Hathaway umbrella via an acquisition in the late 1990s. The brands operate brokerages, franchises, and provides various other ancillary services such as mortgages. Overall, Berkshire Hathaway HomeServices has more than 50,000 agents working in over 1,5000 offices.

HomeServices of America has consistently ranked among the top real estate firms in the U.S. and in March scored its fourth consecutive year atop the prestigious Real Trends 500 ranking of largest brokerages in the country.

In the company’s latest report, it specifically explained the HomeServices’ net income dropped primarily thanks to “lower earnings from mortgage services due to a decrease in funded volume and in refinancing activity.” Income also declined as a result of a “decrease in closed units at existing companies.”

HomeServices is also part of Berkshire Hathaway’s energy and utilities division, which ultimately saw its after-tax income increase 6.7 percent. However, losses in the brokerage business, among other things, offset the segment’s gains.

Berkshire Hathaway stock dropped Monday as investors reacted to the report, falling from nearly $486,000 per class A share when the markets opened to less than $473,000 by late afternoon. The firm also trades class B shares, which fell Monday from $325 in the morning to just over $313 in the afternoon.

Credit: Google

The company had a market cap of about $696.7 billion as of Monday afternoon.

Berkshire Hathaway timed the release of its earnings report to coincide with its annual shareholder meeting, which according to the Wall Street Journal is known for its festive tone and quirky memorabilia. In the past, for example, attendees have gone home with Fruit of the Loom underwear bearing Buffett’s face. The event has become known as the “Woodstock of Capitalism” due to its popularity. And on Saturday, one attendee told local news station KMTV that he thinks of attending the event as being a “pilgrimage.”

Berkshire Hathaway’s earnings come at the beginning of what is likely to be a closely watched earnings season in the real estate world. Though the last two years have generally been good to real estate companies (if not to their stock prices), rising interest rates, continued low inventory, and fears about a recession are now creating significant headwinds in the industry. Investors and agents will consequently be watching this month’s earnings season for any signs of shifts in the market.

The Berkshire Hathaway name most recently made headlines in the real estate world just last week when Berkshire Hathaway HomeServices New York Properties, a franchise conglomerate in the Empire State, hired a pair of new executives. Before that, in January, the company teamed up with advertising firm Adwerx.

Update: This post was updated after publication with additional background on HomeServices and its earnings.

Email Jim Dalrymple II

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