The 2022 housing market was full of challenges for most, if not all, members of the industry. Mortgage rates and home prices hit record highs, and homebuying sentiment hit record lows. Navigating the tumultuous market, Anywhere Real Estate saw a decrease in revenue in Q4 and 2022 as a whole, and overall reported a net loss in Q4, according to company executives.
“Anywhere responded to a challenging 2022 housing market with agility to both prioritize our critical growth investments and continue to reengineer how we operate at a lower cost base,” said Ryan Schneider, president and CEO. “We remain committed to our goals of growing our advantaged positions in franchise, luxury and transaction services, along with our focus on simplifying the transaction for consumers and agents alike.”
Anywhere generated a total revenue of $1.3 billion, according to their Q4 2022 earnings report, which the company said is in line with transaction volume declines of 33% and market volume down more than 30%. The company’s net loss for Q4 was due to non-cash goodwill and franchise trademark impairments. Operating EBITDA for Q4 was down $12 million compared to one year ago.
“Higher mortgage rates continued to put pressure on affordability, and these higher mortgage rates are hurting this new supply of inventory, as many homeowners are locked into their current home with low mortgage rates,” said Charlotte Simonelli, executive vice president, chief financial officer and treasurer.
Anywhere Brands Franchise group, one of the company’s key drivers, saw $186 billion in closed homesale sides, and $440 billion in average homesale price. Another key driver, Anywhere Advisors Owned Brokerage Group, saw $64 billion in closed homesale sides, and $661 billion in average homesale price. The last key driver, Anywhere Integrated Services Title Group, saw $26 billion in purchase title and closing units, and $2 billion in refinance title and closing units.
Despite a meaningfully profitable Q3, Anywhere’s total revenue for 2022 was down 13% year-over-year at $6.9 billion, and reported a $449 million operating EBITDA. Additionally, the company reported a net loss of $287 million for the year, driven by $470 million of goodwill and franchise trademark impairments, and an adjusted net income of $32 million.
Cost savings, which were originally targeted at $70 million, superseded expectations to to reach approximately $150 million in 2022, and cash on hand reached $214 million. On the other hand, full year free cash flow landed at -$159 million due to a large negative working capital use in Q1 2022. Combined closed transaction volume for 2022 also decreased 14% year-over-year.
“In 2022, Anywhere executed a relentless focus on financial and operational performance, including $150 million in realized cost savings, with strategic actions to solidify our foundation for the future,” said Simonelli. “We continue to prioritize investing for growth while driving even greater efficiencies in our business…For 2023, we expect to deliver about 200 million in additional cost reductions, including carryover of approximately $50 million of actions taken in 2022.”
As for the company’s key drivers, Anywhere Brands Franchise Group saw $911 billion in closed homesale sides, and $455 billion in average homesale price. Anywhere Advisors Owned Brokerage Group saw $318 billion in closed homesale sides, and $699 billion in average homesale price. Lastly, Anywhere Integrated Services Title Group saw $133 billion in purchase title and closing units, and $18 billion in refinance title and closing units.
While the past year saw a constantly shifting market and many other challenges, 2023 forecasts released at the end of 2022 saw challenges continuing, but with a light at the end of the tunnel in an incoming market cooldown in a year or so.
Agreeing with this sentiment, Schneider said that “I still believe the outlook for housing over the decade is strong, and most importantly and potentially excitingly right now, we may be at or near a bottom already. We have all seen a number of the housing indicators in the macro economy exhibit more stability.”
“We are laser-focused on change in how we operate our company to deliver greater efficiency and enhance our value proposition” continued Schneider. He explained that the company is working to make numerous changes and revamps to their systems and processes, as well as building on their investments and franchising.
Despite the housing market remaining weak at the start of 2023, and expected transaction volume to be down 30% compared to 2022, Anywhere executives said they expect their operating free cash flow to be positive, driven by their cost management and favorable working capital.
“Standing here today, in February, we really like what looks to be a better competitive environment for us, and potentially most excitingly based off the data in our book from December and January, we may have reached the bottom of the housing downturn. We really like our positioning to win, especially as the market rebounds,” concluded Schneider. “Even in a challenging market, we like the flight to quality that we’re seeing in the better competitive environment and our growth vectors, which together, we believe will pay substantial dividends for us when the market recovers.”
