Douglas Elliman Revenue Declines In Face Of Luxury Housing Shortage

Douglas Elliman’s revenue declined in Q2 as the housing market — particularly the luxury sector — struggled with slower activity, the company said in its third earnings report as a public company.

New York-based residential brokerage Douglas Elliman experienced a decline in revenue in the second quarter as the housing market — in particular, the luxury sector — faced a slow down, according to an earnings report on Friday.

Despite the decline, however, the quarter still marked Douglas Elliman’s second highest quarterly revenue in the company’s history.

Quarterly consolidated revenue fell 7 percent from the previous year to $364.4 million. Gross transaction value during the second quarter was $13.6 billion compared to about $15.1 billion the year before.

By contrast, during the first quarter of 2022, revenue increased 13.2 percent compared to the same quarter last year, to $308.9 million.

During the second quarter of 2022, the real estate brokerage reported an average price per transaction of $1.7 million.

Howard Lorber | Photo credit: Douglas Ellisman

“Douglas Elliman delivered the second highest quarterly revenue total in our company’s history this past quarter — and achieved a record-setting revenue for the six months ended June 30, 2022,” Douglas Elliman Chairman and CEO Howard Lorber said in a statement. “We are extremely proud of our team for delivering another successful quarter and we look forward to accelerating our momentum as we capitalize on significant opportunities in the US residential real estate market.”

Douglas Elliman’s net income clocked in at $10.2 million ($0.13 per diluted common share) compared to its net income of $39.5 million ($0.51 per diluted common share) in Q2 2021.

The company’s consolidated operating income hovered at $14.6 million compared to $43.2 million the year before, and the brokerage segment’s operating income was $21.6 million compared to $43.2 million the year prior.

Meanwhile, adjusted EBITDA attributed to Douglas Elliman stood at $19.2 million compared to $45.3 million the year before, the decline of which the company attributed to expenses related to becoming a stand-alone public company in late 2021.

Adjusted EBITDA for the real estate brokerage segment of the business was $24.4 million compared to $45.3 million the year before.

Consolidated revenue in the first half of 2022 (the six months between January 1, 2022 and June 30, 2022) rose 1.3 percent compared to a year earlier, to $673.3 million.

During this same period, the real estate brokerage segment earned a gross transaction value of about $25.3 billion, equal to what it earned during the same period in 2021.

During the 12-month period ending June 30, 2022, the company saw consolidated revenues of $1.4 billion, with the real estate brokerage segment earning a gross transaction value of approximately $51.2 billion. During that period, the real estate brokerage segment’s average price per transaction was $1.6 million.

During an earnings call on Friday, Lorber said the brokerage faced a challenging period as luxury listing inventory waned in the second quarter across many of the brokerage’s markets. Uncertainty in the economy and rising mortgage rates also impacted buyers’ behaviors.

“In June, we began to see a decline in commission receipts and this trend continued in July,” Lorber said. “We believe this trend has been caused by less new listing inventory entering the market, financial market volatility, as well as significant increases in mortgage interest rates. Initially, this decline skewed towards the lower end of the market, because of its sensitivity to mortgage rate increases. However, luxury markets recently experienced softness that we believe has been due in particular to volatile financial markets, as well as a limited listing inventory of luxury homes that has existed since the end of 2021.”

Still, Lorber expressed confidence that luxury markets would stabilize in the near future alongside financial markets.

He also noted that the brokerage is expanding aggressively across Texas, which has seen higher homebuyer demand in the wake of the pandemic. Thus far the brokerage has added 125 agents in Texas in 2022 and has plans to add more.

“Looking ahead,” Lorber concluded, “we are focused on creating stockholder value through strategic market expansion, continued recruitment of best-in-class talent, operational efficiencies and further adoption of innovative solutions to empower our agents.”

Email Lillian Dickerson

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