Top markets for affordable renovated housing inventory

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HousingWire Magazine: December 2021/ January 2022

AS WE ENTER A NEW YEAR, let’s look at some of the events that we can look forward to in 2022. But what about what’s next for the housing industry?

Back to the Future of Mortgage Lending

This webinar will be a discussion on understanding what’s to come in the future of mortgage lending by analyzing past trends in the industry, evolving consumer behaviors and demographics of the industry’s production capacity.

Logan Mohtashami on Omicron and pending home sales

In this episode of HousingWire Daily, Logan Mohtashami discusses how the new COVID variant, Omicron, will impact inflation and whether or not it will send mortgage rates lower.

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Another profitable quarter for Realogy, but what’s next?

Analysts pepper Realogy CEO Ryan Schneider with questions about company forays into iBuying and mortgage

HW-realogy-ceo-ryan-schneider
Realogy CEO Ryan Schneider

Realogy made a profit for the fifth straight quarter. But the brokerage conglomerate faces questions about how its business is diversifying especially amid a slightly cooler housing market.

The company behind Coldwell Banker, Century 21, Better Homes and Gardens, Sotheby’s Realty and Corcoran reported $114 million in third quarter net income Thursday. That compares to a $98 million net gain in the third quarter of 2020 and $149 million net income in Q2.

Realogy has made $296 million in the first nine months of 2021.

The Madison, New Jersey-based business reported $2.19 billion in revenue. But that figure includes the full commission of each home transaction that is completed by a Realogy agent. For the average home sale, roughly 78% of the commission stays with the Realogy agent with the remaining 22% kept with the company. So, once the agent’s commission cut and “other related expenses” are subtracted, Realogy posted $881 million in quarterly revenue.

The vast majority of Realogy’s operations are tied to sales commissions, service fees from title insurance and fees collected from franchise affiliates that use one of the Realogy brand-names. However, the topics de jour on the earnings call were Realogy’s version of instant homebuying – called RealSure, and the company’s mortgage joint venture with Guaranteed Rate.

Company CEO Ryan Schneider repeatedly said in response to analyst questions that he was “excited” and a “big fan” of RealSure, a partnership that Realogy launched in 2019 with HomePartners of America, which today is a subsidiary of Blackstone.

Realogy announced this week that Katie Finnegan, formerly vice president of mergers & acquisitions at Walmart and chief customer & ecommerce officer at RiteAid, would be RealSure’s first CEO, and Schneider said on the call that Realogy was “expanding its investment” in the partnership.

Like Opendoor and other iBuyers, RealSure makes a cash offer on seller’s homes. Schneider, however, said that 70% of RealSure customers choose instead to put their home on the market with a Realogy agent than take the cash offer. Realogy has not provided how many customers have used RealSure, how much revenue it generates, or how much more money it plans to invest. The program is available in 21 markets, according to a public filing.

Another subject of discussion was Guaranteed Rate Affinity, a mortgage joint venture with Chicago-based Guaranteed Rate that is 49.9% owned by Realogy. The joint venture generated $126 million in 2020 earnings, but it faces “headwinds,” said Realogy Chief Financial Officer Charlotte Simonelli, due to fewer homeowners refinancing their mortgage.

The joint venture’s 2021 earnings would “settle between” the $15 million generated in 2019 and last year’s figure, Schneider predicted.

Thursday’s earnings call comes amid the backdrop of a hot real estate market that might be cooling. Median home prices and number of sales in the U.S. have leveled off a bit after continual jumps between the summer of 2020 and spring of 2021. Overall volume may trend slightly down as “the lack of supply is increasingly an issue,” Schneider said.

The U.S. housing market is trending to about six million sales per year, the CEO noted. Realogy does enjoy a sizable chunk of this market: The company’s brokerage and franchise affiliates reported representing either the buyer or seller on over 1.1 million sales in the first nine months of 2021.

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