Residential brokerages are repeating the same refrain to entice buyers as mortgage rates reach 20-year highs: “Marry the price and date the rate.”
As high rates deter sellers and buyers alike, they’re keeping listings off the market and constraining sales, Douglas Elliman chairman Howard Lorber said in the company’s third-quarter earnings call.
As luxury inventory remains strained, Elliman posted a slight net loss of $4 million in the third quarter. Consolidated revenues were $272.6 million, down from $364.4 million in the second quarter and a roughly 33 percent drop from $354 million the previous year.
The firm’s real estate brokerage business finished the quarter with $11 billion in gross transaction volume, down from $13.4 billion in 2021. Its adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — was $124,000 for the quarter, down from $27.8 million in the prior year period.
The company, which spun off last year from parent company Vector Group, has grown its agent headcount by 336 so far this year, said Lorber, who pledged the firm won’t reduce agent-facing expenses.
“That we want to leave alone because that’s one of the reasons we are bringing in new agents and agents are staying with us,” he said.
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Lorber said comparing metrics to 2021 levels “doesn’t seem to make much sense,” because last year’s market “was something I don’t think anyone really understands what happened, how it happened so quickly.”
The chief executive touted the company’s expansion earlier this year into Nantucket, Massachusetts, New Canaan, Connecticut and Las Vegas, as well as new offices in its existing markets of Newport Beach, California and Basalt, Colorado. Those luxury markets, he said, are less impacted by rising rates.
The brokerage starts small in new markets with local brokers to “not spend a lot of money in opening or buying offices,” Lorber said.
“We’re opening in markets in a slightly different way than those that just go out and buy other companies,” Lorber said.
Despite the struggling luxury market, Lorber said Elliman is poised to have a big year in new development in Florida.
“The most robust new development market for us is Florida, where we have a very big schedule of new projects coming on the market in the next 18 months, in the billions,” he said. “We’re going to be opening more, probably every month.”