Douglas Elliman posted its fifth consecutive quarterly loss, but executives sounded an optimistic note over rising inventory levels and new development opportunities.
The residential brokerage continued to narrow its losses in the third quarter, if by a small margin. It reported a $4.9 million net loss compared to a $4 million loss in the same period last year and $5.2 million net loss in the previous quarter.
“The last six quarters have been a difficult part of the cycle, as historically high mortgage rates have sustained listing inventory shortages across our luxury markets,” Chairman Howard Lorber said.
Despite these “industry-wide headwinds,” Lorber noted some improvements that could signal a positive shift for the market, including a boost in deal prices and narrowing revenue declines.
The firm’s average sale price per transaction increased to $1.6 million last quarter, up from $1.5 million in the same period last year. Listings were also up 6 percent from the year-ago numbers.
Revenue dropped 8 percent year-over-year to $252 million, a significantly smaller drop than the annual declines reported for the first and second quarter of this year. First quarter revenues were down by 31 percent year-over-year, while second quarter revenues dropped 24 percent.
Elliman is betting big on South Florida, where the firm reported a 20 percent revenue increase. Lorber also said the company is investing in the area’s West Coast, including opening a new office in Sarasota earlier this month.
“The best markets tend to emerge first from any downturn,” Lorber said, before descibing Elliman’s increased revenue in Florida is an “indicator of future performance across luxury markets.”
The company posted an operating loss of $8.8 million last quarter compared to a $5.2 million operating loss in the third quarter of 2022. In the same period, Elliman’s real estate brokerage segment reported a $2 million operating loss compared to an operating income of $1.5 million.
Elliman reported a $3 million loss in adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — last quarter, down from the $124,000 income in the same period in 2022.
The firm’s brokerage segment posted a $1.5 million gain in adjusted EBITDA in the third quarter, compared to an income of $5 million in the third quarter last year.
Lorber started the call by addressing the firm’s status as a defendant in antitrust lawsuits, along with other brokerages and the National Association of Realtors in Missouri and Illinois.
“We believe these lawsuits lack merit, and we intend to challenge them,” Lorber said of the suits filed last week. He added that the litigation will not likely impact the firm’s day-to-day business.
The complaint, considered a copycat of other litigation filed in both districts, accuses the firms of conspiring with NAR to inflate broker commissions charged to homesellers.
The jury in the Missouri case, known as Sitzer/Burnett, found NAR, Keller Williams and HomeServices of America guilty of the scheme and ordered the plaintiffs to pay a potential sum of $5 billion in damages if the judge confirms their verdict.
The trial in the Illinois case, known as Moehrl, is scheduled for trial in early 2024.
Elliman, along with dozens of its New York-based agents, is also named in a fair housing lawsuit. The plaintiff, a Long Island resident, accused some of the brokerage’s current and former top agents of refusing to help her find an apartment because she was a Section 8 voucher holder — violating the federal Fair Housing Act and source-of-income discrimination laws in New York.