Q1 Real estate earnings share some surprises

Real estate earnings reports unsurprisingly show good news, but Realogy had some pleasant surprises.

Housing sales in the first quarter were at the highest levels since 2006 across all segments continuing the run that started in Q3 2020. Despite record-low inventory numbers at the start of the first quarter, it’s incredible that agents are finding and unlocking homes so that they can generate this record level of sales.

As for some of the nation’s giants, it was unsurprisingly almost all good news. We’ve reviewed the first quarter 2021 earnings reports for Realogy, eXp, Compass, Redfin, RE/MAX, Realogy, Redfin, Keller Williams, and Zillow. 

Double-digit transaction count for Realogy

Realogy had an incredible first quarter and not just because their financials were on the upside. Most importantly, after growing their transaction count in the very low single digits for the past few years, they saw 20% to 22% growth in closed transactions in the first quarter over the prior year’s first quarter for both the franchise and owned brokerage segments. The increase for Realogy beat the market rate of growth significantly. After several years of lagging the market, Realogy gained share.

Exceptional agent count for eXp

There were fewer surprises with eXp. The size of their growth was exceptional with agent count up 77% over the prior period. Transactions were up 95% and transaction volume up 123% in the same comparisons.  Revenues were up 115% and gross profit was up 95%. The fast growth of eXp was not unexpected given what we hear from the market in general.

Compass saw 80% year-over-year revenue increase

Compass’ Q1 results were not surprising on the bottom line, reporting a $31 million loss as measured by Adjusted EBITDA. It did however see an 80% year-over-year increase in revenues, boosted by a corresponding 67% increase in transactions. Compass also announced it had formally entered into the Rhode Island, Delaware and Tampa markets, which brings its total metro market presence to 47.

Most Redfin metrics showed improvement

Redfin also turned in exceptional quarter-over-quarter growth. Closed transactions were up 38% over the prior first quarter, gross revenues were up 40% and gross margin was up 229% for the same period. Also of note was that the net loss shrunk from $60 million in the first quarter of 2020 to a net loss of $36 million in the first quarter of 2021. Most metrics for Redfin showed improvement during the period. Read their real estate earnings report.

RE/MAX shows solid quarter

RE/MAX had a solid quarter with worldwide agent count growing 6.4% to 140,214. In North America the growth was 0.7%. Revenues increased 2.0% in the period and EBITDA increased 18.5% to $23 million. Its new Motto Mortgage franchise had its best year ever in franchise sales. RE/MAX agent growth showed the highest trailing 12 months in over a decade.

Global growth strong for Keller Williams

Keller Williams had another strong quarter with closed transactions up 21.3% over the first quarter of 2020 and closed volume up 39.7% in the same period. Global growth was also strong with agent count outside North America up 23.1% over the first quarter of 2020. Closed transactions and volume were also up over 58.7% and 100% respectively.

Zillow traffic increased 15% year over year

Zillow also had a strong first quarter. Internet, Media and Technology (IMT) revenues were up 35% and mortgage revenues were up 169% in the first quarter of 2021 over the first quarter of 2020. Traffic to Zillow increased 15% on a year-over-year basis. Zillow‘s real estate earnings report showed that its trailing 12-month EBITDA reached a new high at $519 million.

These real estate earnings results are not all that surprising given the record high level of housing sales and general public interest in the rapidly rising housing price environment. The largest surprise to us was the recovery in Realogy’s core business – a surprising turnaround from prior years.