The Brokerage Slowdown has Begun
The market is softening and it's reflected in quarterly declines. Fewer transactions mean less brokerage revenue.
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All real estate brokerages experience a seasonal decline in revenue during the first three months of the year — but the amount varies between brokerages.
Why it matters: The degree of revenue decline highlights which companies are under and overperforming “the market” — a possible leading indicator of who may be in more or less trouble during a turbulent year ahead.
Quarterly revenue has declined the most at Redfin and Realogy, the least at eXp and Douglas Elliman, and Compass sits right in the middle.
Consequently, Compass and Realogy are in the midst of a steep, seasonal revenue drop while eXp slowly makes it way closer to the top.
The market is slowing and real estate agents are doing fewer transactions.
For example, the number of transactions per agent at Compass is at record lows, lower than Q1 last year and on par with the early days of the pandemic.
The bottom line: The market is softening. Fewer transactions mean less brokerage revenue.
A drop in revenue is a larger problem for brokerages with high fixed costs and a heavy cash burn (Compass), and brokerages with salaried agents (Redfin).
June 07, 2022
Randy Byrd, Team Leader & Coach
The Byrd House Team - Brokered by eXp Realty, License# 01878277
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