Realogy announced a $300 million stock buyback Thursday on the heels of strong fourth-quarter performance.
The real estate services firm, which owns brokerages Coldwell Banker, Sotheby’s International Realty and Corcoran, posted $47 million net income in the fourth quarter. That brings the firm’s annual profit to $343 million, or $2.95 per share.
The firm’s growth was driven by the humming housing market, as its brokers were in on 16.4 percent of all U.S. home sales. Transaction volume grew by 29 percent year-over-year, and the firm’s agent count grew by 6 percent amid a stiff fight for talent in the industry. The firm works with roughly 196,600 sales agents in the U.S. and 140,800 abroad.
Realogy made good on its promise to use excess cash to pay down debt, cutting net debt by $420 million in 2021. It also continued to invest heavily in RealSure, its iBuying joint venture with Blackstone’s Home Partners of America, which now operates in 24 cities across the country. RealSure also expanded its lending arm to seven cities, providing financing to allow prospective homebuyers to make cash offers.
“We’re putting a real amount of money in here,” Realogy CEO Ryan Schneider said of the lending venture. “We like that investment and we’re gonna step it up this year.”
While the company made its bones in brokerage, it plans to spend more money on mergers and acquisitions outside of agencies in 2022, targeting technology and businesses adjacent to the firm’s core business. “It’s not about playing the brokerage game. It’s about simplifying the transaction,” said Schneider.
He touted the company’s new luxury auction house with Sotheby’s, which works in tandem with its luxury brokerage brands.
The firm minimized concerns about the impact rising mortgage rates and limited housing inventory could have on its bottom line. By targeting luxury sales, it hopes to avoid the damage rising rates could do to its competitors.
“Affordability matters, but it really matters primarily for the first-time homebuyer,” Schneider said. “The intersection of first-time homebuyers and mortgage and inventory is where all the pressure is, and that’s the part of the market we do the least business in.”
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Realogy has so far avoided the steep declines in stock price suffered by its competitors Compass and Douglas Elliman. Compass, which also announced fourth-quarter earnings today, lost nearly half a billion dollars in 2021, with expenses up 80 percent and revenues only up 73 percent.
The firm cautioned that it expects a return to normal seasonal fluctuations in the housing market this year after two years of brisk sales and historic price appreciation.