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Douglas Elliman reported slipping revenues and growing losses in the third quarter of 2023 as the brokerage continued to contend with negative market forces affecting the real estate market at large.
The New York-based brokerage reported consolidated revenues of $251.5 million during the third quarter, a drop from the third quarter of 2022 when they logged $272.6 million in revenue, according to an earnings report released Wednesday.
The firm reported a net loss of $4.9 million, up from a net loss of $4 million logged at the same point last year.
Year to date, the company reported consolidated revenues of $741.4 million, compared to $945.8 million in the prior year period.
“Douglas Elliman delivered another strong quarterly performance despite a challenging macroeconomic environment, thanks in large part to stable pricing in our luxury markets, the competitive advantage of our development marketing business, and our dedicated team of world-class agents,” Douglas Elliman Chairman and CEO Howard Lorber said in a statement.
“Douglas Elliman’s differentiated platform and the underlying strength of our business make us well-positioned to weather the current challenging market conditions as we remain focused on capitalizing on our competitive advantages to drive long-term growth and value for stockholders,” Lorber added.
On a call with investors Wednesday morning, Lorber acknowledged the negative impact inventory shortages have had on the company.
“We have previously discussed the cyclical nature of our industry. The last six quarters have been a difficult part of the cycle as historically high mortgage rates have driven sustained listing inventory shortages across our luxury markets.”
But he pointed to positive trends the company observed in the third quarter, such as the average sales price per transaction increasing to $1.57 million in the third quarter, up from $1.49 million in the third quarter of 2022.
Additionally, revenue in the third quarter was only down 7.7 percent from the third quarter of 2022, compared to the yearly declines of 30.7 percent and 24.3 percent recorded in the first and second quarters of the year, respectively.
“We believe this signals that the market is beginning to adjust to interest rates,” Lorber said.
Third quarter earnings came on the heels of Douglas Elliman being named as a defendant in a commission lawsuit similar in nature to the bombshell Sitzer/Burnett lawsuit that ruled last week in favor of the plaintiffs who accused some of the biggest franchisors in real estate of conspiring with the National Association of Realtors to inflate home seller commissions.
Douglas Elliman was named in a new lawsuit filed by the same attorney alongside Compass, eXp World Holdings, Howard Hanna Real Estate, and others.
Lorber commented briefly on the lawsuit, saying he believed it would not hold up.
“We believe the lawsuits against us lack merit and we intend to challenge them,” Lorber said. “We do not anticipate these lawsuits will result in any changes to our business that will significantly disrupt the agent-buyer relationship.”
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