Tag Archives: Realogy

Realogy opens in Dubai

Brave souls. They’re early, late or just in time. I’d say late, but maybe not.

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Market results, predictions from Realogy

The parent of Century 21, Sotheby’s and Coldwell Banker is out with its latest 10K. Understand that I am not picking on Realogy here – I doubt any other firm is doing much better, if at all. But as the largest franchiser of real estate brokerage firms, its data provides the best over view of what’s going on.

I’ll start with the conclusion because it sums up as well as anything I’ve read the current uncertainty of where the market’s headed and when, or if, it will recover.

We believe that long-term demand for housing and the growth of our industry is primarily driven by affordability, the economic health of the domestic economy, positive demographic trends such as population growth, increasing home ownership rates, interest rate trends and locally based dynamics such as housing demand relative to housing supply. Although we see improvement in affordability and a slight lessening in the overhang of housing inventory, we are not certain when credit markets and the job market will return to a more normal state or the general economy will improve. Consequently, we cannot predict when the market and related economic forces will return the residential real estate industry to a growth period.

Highlights from the report include:

Homesales

During the first half of this decade, based on information published by NAR, existing homesales volumes have risen to their highest levels in history. That growth rate reversed in 2006 and continued to decline through 2008 as reflected in the table below. Our recent financial results confirm that this negative trend continued into 2008 as evidenced by homesale side declines in our Real Estate Franchise Services and Company Owned Real Estate Brokerage Services businesses which for the year ended December 31, 2008 experienced closed homesale side decreases of (18%) and (16%), respectively, compared to the year ended December 31, 2007.
                                       2008 vs. 2007              2007 vs. 2006           2006 vs. 2005
Number of Homesales
Industry
NAR                                              (13 %)(a)                  (13 %)                   (9 %)
FNMA                                             (13 %)(a)                  (13 %)                   (9 %)
Realogy
Real Estate Franchise Services                   (18 %)                     (19 %)                  (18 %)
Company Owned Real Estate
Brokerage Services                               (16 %)                     (17 %)                  (17 %)
Existing homesale volume was reported by NAR to be approximately 4.9 million homes for 2008 compared to 5.7 million homes for 2007, which was down from 6.5 million homes in 2006 versus the high of 7.1 million homes in 2005. Our recent financial results confirm this trend as evidenced by our homesale side declines in our Real Estate Franchise Services and Company Owned Real Estate Brokerage Services businesses.
Homesale Price
Based upon information published by NAR, the national median price of existing homes increased from 2001 to 2005 at a compound annual growth rate, or CAGR, of 7.3% compared to a CAGR of 3.0% from 1972 to 2000. According to NAR, the rate of increase slowed significantly in 2006 and declined for the first time since 1972 in 2007 and 2008 as reflected in the table below. Our recent financial results confirm that this declining pricing trend continued into 2008 as evidenced by homesale price declines in our Real Estate Franchise Services and Company Owned Real Estate Brokerage Services businesses which for the year ended December 31, 2008 experienced average closed homesale price decreases of (7%) and (10%), respectively, compared to the year ended December 31, 2007. Furthermore, the decrease in average homesale price for the Company Owned Real Estate Brokerage Services segment is also being impacted by a shift in the mix and volume of its overall homesale activity from higher price point areas to lower price point areas as well as an increase in REO activities.
                                       2008 vs. 2007              2007 vs. 2006           2006 vs. 2005
Price of Homes
Industry
NAR                                               (9 %)(a)                   (1 %)                    1 %
FNMA                                              (9 %)(a)                   (1 %)                    1 %
Realogy
Real Estate Franchise Services                    (7 %)                      (1 %)                    3 %
Company Owned Real Estate
Brokerage Services                               (10 %)                       8 %                     5 %
Update: Loss of $1.9 billion for the year. Ouch.
UPDATE II: Apollo to support Realogy with more money. Which is only fair, since it was Apollo who piled all that junk debt on Realogy to begin with.

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Apollo lays an egg

clipped from www.crainsnewyork.com
Apollo’s $8.8 billion LBO of Realogy in April 2007, threatens to turn into an even worse blunder. Cash from operations collapsed by 86% to $44 million through the nine months ended Sept. 30, a dire situation considering that the company is on the hook for about $600 million in annual interest expense on its $10 billion debt. Realogy is trying to stop the bleeding by swapping debt for new bonds, but investors are balking. Activist investor Carl Icahn sued last week, contending that Realogy is insolvent and the proposed debt swap is a fraudulent transfer.
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