Q2 2021 Realogy Holdings Corp Earnings Call
[music].
Good morning, and welcome to the real Itchy Holdings Corp, second quarter 2021 earnings Conference call via webcast. Today's call is being recorded and a written transcript will be made available and the investor information section of the company's website tomorrow.
A webcast replay will also be made available on the company's website.
At this time I would like to turn the conference over to Realogy Senior Vice President Alicia Swift. Please go ahead Alicia.
Thank you Lisa good morning, and welcome to <unk> second quarter 2021 earnings conference call on the call with me today are real Itchy, CEO and President Ryan Schneider and Chief Financial Officer.
And Sir Charlotte Simonelli.
As shown on slide 3 of the presentation. The company will be making statements about its future results and other forward looking statements during this call.
Statements are based on current expectations and the current economic environment.
Forward looking statements and projections are inherently subject to.
The significant economic competitive and other uncertainties and contingencies, many of which are beyond the control of management, including among others. The ongoing COVID-19 crisis inventory levels and other uncertainties related to the continued strength of the housing market.
Actual results may differ materially from those expressed.
Or implied in the forward looking statements.
For those who listen to the rebroadcast of this presentation and remind you that the remarks made herein are as of today July 29, and have not been updated subsequent to the initial earnings call.
Important assumptions and other important factors that could cause actual.
Book to differ materially from those and the forward looking statements are specified in our earnings release issued today as well as our annual and quarterly SEC filings.
Also certain non-GAAP financial measures will be discussed on this call and per SEC rules important information regarding these non-GAAP financial measures.
<unk> included in our earnings press release.
And our data reference during today's call is based on non <unk>. Most recent public estimates, which are subject to review and revision.
Factors that may impact the comparability of our home sales statistics and our are outlined in our annual and quarterly reports filed with the.
And I think day.
To help contextualize year over year comparisons to 2020 on today's call. Just a reminder, that due to the Covid crisis. The housing market saw a sharp decline and transaction volume in Q2, 2020.
Given this challenge to year over year comparisons we believe it is also helpful.
So, let's compare certain metrics against 2019.
As a reminder, really responded to this transaction volume declines and Q2, 2020 with significant temporary cost saving measures some of which continued into the third quarter of 2020.
Those temporary cost saving measures resulted in approximately 150.
And $50 million of aggregate savings with approximately 100 million recognized in the second quarter of 2020.
Last the references made to July month to date and these remarks reflect data through July 22021, now I will turn the call over to our CEO and President and Ryan Schneider.
Thank you Alicia good morning, everyone real Itchy delivered an outstanding second quarter and.
Matched combination of our strategic progress innovation through technology, and commanding position and the luxury market drove powerful financial results, including significant market share gains.
We continue to invest.
And to drive future growth, and we're making great progress strengthening our balance sheet.
We will do is leading the industry deliberately and powerful results today and positioning our business for continued success and the future. Let me start by sharing our outstanding Q2 results real itchy delivered exceptional profitability with 300.
$10 million of operating and EBITDA of $135 million year over year and up almost $70 million versus 2019.
And you've demonstrated great transaction volume growth up 85% year over year substantially above nars, plus 53% real estate outperformed and are on both.
<unk> unit growth and price growth in all our brokerage and franchise businesses and its.
Slightly more than half of our volume and growth in the quarter was driven by unit growth.
Our brokerage and franchise businesses performed extremely well with brokerage outpacing franchise in part driven by a very solid New York.
And the rebound.
Real estate gain significant market share and the fourth quarter or the fourth quarter and a row ending June at 16, 4% on a last 12 months basis and as Alicia mentioned Q2, and 2020 was a pretty unique quarter and the housing industry.
Our Q2, 2021 volume was up and exciting.
Sydney, 1% when you compare to Q2 of 2019 and.
Clinically our balance sheet is and its best position ever as a public company as a result of our powerful operating performance disciplined cost management and opportunistic capital market actions. We ended the quarter with a 2.5 X net leverage ratio.
And over $815 million and cash are exceptionally strong cash flow and balance sheet position gives us strategic flexibility to invest for growth and we're deploying net flexibility and multiple investments that I will touch on later.
Looking forward, we are energized by the robust open and close transactions.
And volume already in our pipeline as we enter Q3 and so.
And so for example, our closed transaction volume is starting off very strong July month to day is up 20% versus 2020 and up 30% versus 2019.
Our open transaction volume also.
It looks great.
June was up 20% versus 2020 and up 40% versus 2019 and July month to date is up 4% versus 2020 and up 42% versus 2019, and finally and New York City market is improving with both Q2 transaction volume and are.
Our recent open volume more than double 2020 and above the levels we saw in 2019.
And I remember that given the housing surge and our market outperformance and the back half of 2020 year over year comparisons and the back half of 2020, 1 will be more difficult.
And 1 way we are.
We're seeing that is and our July numbers. The increased volume is coming from price depreciation instead of unit growth given how strong and unit growth was in July of 2020.
But with that backdrop. The fact that our July volume is ahead of last year is incredibly exciting.
Now beyond the Realogy specific.
Pacific numbers. The biggest question, we get and what are we seeing and the housing market and bluntly. The biggest thing we're seeing is housing demand stay and elevate.
Demand for home purchases is substantially outpacing supply houses across all price points are selling fast.
The percentage of multiple offers and above listing price.
Per as both remained high and frankly, if there was more supply available we could sell.
Now the public inventory numbers for June and have actually started to trend up a bit the internal inventory numbers. We track are similarly trending up and we have some early optimism that we arent seeing green shoots of increased supply.
And finally.
While price appreciation has been large we believe that unlike 15 years ago. The large price increases we're seeing today are not speculation they represent real demand for housing.
So having saved 1 of the most important topics from last let me update you on some of our exciting new.
Okay and sectors. So first we remain extremely enthusiastic about real share remember real share is our joint venture with home partners of America that helps customers sell their existing home and or buy their next home backed by a guaranteed cash offer for those of you and new to real share is architected differently from traditional.
<unk> buyers with greater focus on winning listings and supporting agents.
We continue to invest substantially and real share because of our encouraging early results.
We really like the results we're seeing.
Real share as a competitive advantage and helping us win listings that we monetize and our traditional business and.
And real share appeals.
Growth tumors, because it's structured with a 45 day cash offer and is paired with 1 of our great agents focused on selling their house to help our customers get top dollar and with the structure of the joint venture is buying fewer homes and the public benchmarks and we really think we've got a winner here.
Second our excitement is accelerating.
<unk> and our operational progress we're now operating at scale and 21 markets versus 13 markets 3 months ago, and we are now and the market with direct to consumer marketing for reach real share to build real share brand awareness and more importantly to acquire real short customers.
And while our core real sure product and the market.
Today is focused on sellers, our vision is to expand to support buyers as part of the real share value proposition.
Now stepping back from this real share product, let me share 2 related topics for Realogy and home partners of America.
And as we've been doing and our core business. We remained very focused with HPA, capturing broader transaction economics.
As part of the home buying and selling process and to that and real estate and HPA have started and are operating and already profitable title business named real tech to support our efforts together and.
And finally home partners of America was acquired by Blackstone and earlier. This month, we are excited about this and what it means for our joint.
And we view it as a vote of confidence we look forward to continuing our work with HPA.
And shifting to another compelling growth area, our luxury business grew substantially above our overall volume numbers and both the quarter and the past year with Sotheby's International Realty, Our number 1 performing brand and now the fifth largest.
Venture and and all of U S residential real estate.
Our corporate owned brokerage business earned the number 1 real deal ranking and New York City for 2020, and our corporate and franchise business expanded to 7 new geographies since we last spoke and <unk>.
Finally, if you look across Sotheby's International Realty, Corcoran and Coldwell banker.
We continue to lead the industry and million dollar plus transactions and within these businesses. We've been setting records for the number of million dollar plus and $10 million plus transactions and our portfolio.
But given our leadership position and luxury and our strategic optimism about the luxury market, we are investing to grow our luxury brands domestically.
On the brand internationally to provide unique and differentiated luxury technology and to expand our industry, leading domestic and international luxury referral networks.
And finally, we remain very focused investing in technology and product innovation we.
We are very excited about our open architecture approach to technology, which.
Which we believe is a competitive differentiator and we've spoken to you before about some other great products, we develop internally and great products others have built that we are integrating into our open technology ecosystem.
1 thing we haven't discussed lately as our data progress and particular, how we're using our industry leading data scale.
AI to generate powerful insights the Wall Street Journal recently wrote about some of the various AI models, we built and these and other data driven analytic tools remain a critical area. We are investing in to help us run the company better and to provide data driven products with the goal to make our agents and brokers more productive.
So wrap.
Now I'm incredibly excited about our outstanding second quarter financial results, our sizable market share gains our continued strategic progress, especially with tech and data innovation and our balance sheet execution.
We are passionate about the investments, we're making to drive even more growth and the future and looking ahead, we really like the momentum from our Q.
In July and month to date results and obviously, we like the strong demand for housing and we're seeing we believe our future is bright and I will now turn the call over to Charlotte.
Thank you Brian.
Good morning, everyone Realogy is firing on all cylinders, we kicked off 2021 with impressive Q1.
<unk> results and this momentum has continued into Q2 we.
We executed well on our winning value proposition delivered $310 million and operating EBITDA and once again drove market share gains.
We continue to improve our balance sheet with compelling free cash flow.
2 and $243 million and we achieved our lowest net leverage at 2.5 times.
We capitalized on our strong momentum and favorable market conditions to raise capital at a significantly lower cost with our exchangeable bond offering.
So let's touch more on these great Q2.
<unk> results.
Second quarter revenue was $2.3 billion and increase of 1 billion versus 2020.
Operating EBITDA in Q2 set a record at $310 million and increase of $135 million versus 2020.
Operating EBITDA growth with especially.
And the impressive as we lap approximately $100 million and temporary cost savings and taken amid the pandemic and Q2 last year.
We are effectively managing the bottom line and operating margins across our business and expanded margin at both RPG and RFG in spite of last year's temporary savings.
Realogy brokerage group revenue was $1.8 billion up $858 million versus prior year, driven by exceptional volume growth up 96% versus prior year.
<unk> operating EBITDA was $70 million and increase of $55 million versus prior year.
RBG continues to generate substantial operating EBITDA of $187 million before the transfer of intercompany royalties and marketing fees paid to our franchise business.
We saw operating leverage and outstanding volume growth drove margin expansion year over year, despite lapping sizeable.
Visible temporary cost savings.
We grew our owned brokerage agent base, 4% year over year and retention remains strong our leading position and the luxury market and the ongoing New York City rebound truly position us well.
Record setting transaction volume ongoing.
Assessment, and recruiting and retention and agent mix drove commission splits up 212 basis points in the quarter. Additionally business mix drove commissions up 78 basis points due predominantly to the sale of our property management business and timing on our new development business.
Overall.
And we like the investments, we are making and our agents, which are driving impressive results and market share gains.
Real estate franchise group revenue, which includes leads and relocation with $347 million up $120 million versus prior year.
The franchise business delivered transaction.
All from volume growth up 80% versus prior year, and net royalty per side of $418 up $94 versus prior year on.
RFG operating EBITDA was $224 million and increase of $99 million versus prior year as this business also.
And continues to drive powerful operating leverage we love our franchise business, its national scale, and strong and diverse brands and recurring royalty streams.
Realogy title group revenue was $255 million up $95 million versus prior year driven by.
<unk> and core title operations and increased purchase volume offset slowing refinance units.
Total operating EBITDA was $55 million, a decrease of $6 million versus prior year due primarily to the decline of $27 million and our mortgage JV.
Excluding our mortgage JV operating EBITDA was up $21 million year over year.
And title agency, we benefited from growth across the portfolio and greater digital adoption.
We also saw sizable EBITDA growth and our underwriter business, which is up approximately 100% and the.
Strength as we continue to further grow and leverage the power of this fully scaled platform.
And the mortgage JV purchase volume remains strong with June our largest purchase unit and funding months on record.
We also remain focused on growing our portfolio of high quality low.
Quarters.
However, refi volume slowed in the quarter and gain on sale margins declines with more competitive pricing industry wide and.
In addition, the mark to market adjustments on the mortgage loan pipeline consistent with the move in interest rates with negative and Q2.2021 compared.
Paired with a positive adjustment in Q2, 2020, which was a net negative $19 million impact year over year.
And while refi volumes are still up considerably versus 2019, we do expect softer refi volume to continue when compared to 2020.
We remain focused.
On cost efficiency and are driving sustainable improvement and our fixed cost base, despite elevated variable costs associated with higher volumes we.
We are delivering on the $80 million and permanent cost savings, we outlined for 2021 with $70 million or approximately 85% of this target.
<unk> already actions and approximately $50 million realized year to date.
We exited the quarter with our strongest balance sheet and liquidity yet.
Net leverage was 2.5 times and our senior secured leverage ratio was zero times as of June 30, our lowest levels.
<unk> since going public in 2012.
Q2 free cash flow was $243 million up $196 million versus prior year, and we continue to have a zero balance on our revolver.
We are effectively managing our debt portfolio and have made considerable headway over the past year.
Taking a step back since the end of 2019, we took advantage of market conditions and refinanced over $1 billion across or debt transactions reduced net debt by approximately 600 million lowered our leverage ratio by over 2 turns and shifted more to unsecured debt.
While extending our maturities and.
On April we used cash on hand to pay down $150 million of the term loan B facility and in June we issued $403 million of exchangeable notes at a 0.25% coupon, which gives us even further financial flexibility.
We exited Q2 with $859 million and cash, including statutory cash and net proceeds from the exchangeable notes and we expect to utilize this cash towards our priorities, which are to invest and the business and pay down debt and I remain confident and our ability to satisfy our near term.
And maturity.
In closing real estate again achieved outstanding financial results.
Over the past year, we have shown tremendous quality and consistency and our financial performance, which is a direct result of our strategic execution.
And the planned investments and tight cost management.
<unk> momentum is strong and I am extremely proud of what we have delivered both on the balance sheet and the P&L and with that we're happy to take your questions.
At this time I would like to inform everyone. If you would like to ask a question. Please press Star then the number 1 on your telephone keypad.
Pat.
Your first question comes from the line of Cameron Mcknight with K B W.
Hey, guys. Good morning, Thanks for taking my question.
So when you guys parse out the existing home sales data by price point, we see the stronger trends really at the higher end of the price bucket.
Sustainable do you think that.
In the luxury spectrum, and then do you sense that any guidance either kind of delayed transactions from prior periods or any pull forward from future periods.
So great. Great question look we haven't we don't really think there's much and that and the pull forward or delayed transactions bucket. We've been seeing the trend you were talking about now.
On a day.
Basically a year.
A year ago, there was probably a little bit of.
Kind of 1 time stuff with the vacation home surge.
Right.
But we don't see that happening you'll look we've got leadership and the luxury market like I talked about so we obviously that's 1 of the reasons, we're benefiting here and we're really.
We are excited about it.
We don't see the trend for that segment being different than the rest of the market and frankly I do expect it to continue to outperform a bit because if you think about some other things that are driving.
The higher consumer demand 1 of the bigger 1 was obviously at the more remote work kind of thing and Huawei.
Normally that's skews to the higher end of the labor market.
And so a lot more of the folks who are potential luxury buyers.
Our going through the potential for change here and the market based on things like remote work and even some of the rotation into the suburbs and the cities. So it's been a pretty consistent.
And now for a year and I think as you know.
And it's got some legs to it and obviously, we're very well positioned with our luxury leadership.
And to benefit from it as you saw on our results.
Great, Thanks for that and and switching over and we've seen some of your competitors announce partnerships.
And on trend with mortgage lenders, suggesting that this is kind of adjacent revenue opportunity adult focal point of the market can you just talk about the <unk> JV and and what you can.
And do it and kind of drive attachment rates of growth and ultimately earnings contribution.
Well look I mean Tommy.
The $126 million we made.
Last year, I think kind of speaks for itself. So why don't we just start with that and look we've been talking to you for about 3 years about our efforts to build and mortgage business and everybody in this industry either has or should have a mortgage business. It's clearly an important thing and.
And we built the business and 3 years with over 500 loan officers covering our.
Brokerages are operating.
I've talked about our flash close technology that our JV users that helps accelerate the growth and the business this business and help us capture more of those economics and so.
But for us by the way you should know and this is where we differ from most of the competition such as mortgage.
Mortgage REIT, we're integrating with title and driving disproportionate results. Both in 2020 and 2021, we integrate with relocation and the lead generation side, there and we're even starting to get some traction annual integrating with our insurance business.
And so kind of the the hole for us is kind of greater than.
And the sum of the parts. So look we don't spend a lot of time on what others are doing because everybody and the business is a mortgage we spend our time building a great mortgage business and again I think the financials speak for themselves. So.
I'll be more interest from your question when Theres other people make it 100 plus million and mortgage.
Makes sense thanks Ryan.
Your next question comes from the line of John Campbell with Stephens.
Hey, Good morning. This is James holiday stepping in for John Campbell.
So I did try and just to touch on a couple of things here I was hoping that you could touch more on the housing outlook and tie and some more of that.
From your strong luxury performance over <unk> <unk> had a record price appreciation and now on July the moratoriums coming to and Ann which could put some inflow of inventory into the market.
Just wondering if you could talk more about the outlook, there and what housing looks like from here as well as drivers for the luxury market.
Well, let me start with.
The driver and most important thing your question didn't talk about which is in Q2, we had more unit growth games and we had price appreciate it.
And we have this on our numbers and our tables. So you can look it up and we literally had more unit growth and price appreciation and obviously, we like we make money on both but Wow like the unit growth thing is a very.
The whole thing for Q2, so when you talked about a lot of price appreciation and Q2, please don't Miss the unit growth and that.
A big reason that we outperformed on not just on price but on units.
And gain a bunch of market share. So so we're pretty excited about that.
And and then look we're.
We're literally gave you our numbers up too.
Like last Friday, right, we're kind of up 20.
20% versus <unk>.
Last year and had a 30% versus 2019. So we think there's some good stuff and the pipeline here and you know again I've had a belief that the demand we're seeing.
And out there for housing is real like people are rotating into the suburbs and people are moving to the Texas, and Florida, and Arizona, the world and greater ways remote work has changed and kind of where people live.
And then structurally you have got the millennial generation and hitting their prime years and bluntly rates are low.
And credit.
Credibly low and so.
It looks to us like housing demand is still there and as I mentioned on the last question.
Some of these trends like remote work helps the higher end of the market. The most and we are well positioned to benefit there.
So we like what we're seeing we're seeing and New York City come back.
And a positive kind of territory.
And that's a big market for us So we're pretty optimistic and I think the numbers speak for themselves.
The 1 thing I did call out on the script to your question is that because of how big units grew last year and July most of what we're seeing so far and July is price increase, but we still like the really high.
Our tour and at levels in July that were seeing.
And to be even a little above last year's volume.
Feel pretty good so that's kind of what we're seeing and.
And really the latest numbers, we got I mean, there are literally as of 6 days ago.
Got you. Thank you that's helpful. And then if I can squeeze 1 more and here quick theres been.
And a lot of noise on the legal side, possibly on a regulatory type or sorry regulatory side as well.
Some people are questioning right now agent Commission rates, how do you frame up agent value add right now and the level of commissions paid or they justified today versus a decade ago.
Well look we've talked we always we're always.
Hi, and your commission rates and you know the value of agents. We think is quite high and look we think it gets approved and the market.
More people have used agents and the last 12 months than in a day.
Previous.
Customers are voting with their feet and.
The prices that.
And people negotiate with their agents and if you've sold the house you know it's a negotiation.
Is that people sell their house with.
And with agents and stayed basically about flat.
And I think agents deliver real value and you can see that and whether it was some of the health and safety stuff over the past year, whether it's in helping people buy.
By our house and what is a pretty tight market and some parts of the country.
We're just getting the best price for their house and so.
I'm old enough to remember when where and it was predicted and the 90 days of the Internet Internet would put agents out of business, but I think agents deliver real value and that they prove it with their cuts.
From our relationships and.
So we're.
We're excited at what we can to help agents add even more value to customers.
Including some of the stuff, we're doing and make the transaction easier for people with some of our technology and some of our virtual tools that are helping ease of transaction for everybody, especially.
Actually and kind of health and safety funds.
Got you. Thank you for the color I appreciate it.
Your next question comes from the line of Matthew Bouley with Barclays.
Good morning, everyone.
Congrats on the results thanks for taking the questions.
It looks like your agent count is continuing to rise.
<unk> I'm curious.
If you could speak to maybe how much of that kind of matches with sort of broader market wide agent growth simply more people, becoming real estate agents and.
I guess, maybe the way to answer that is kind of focusing on the recruitment and retention of high performing agents.
And you say, that's what I'm getting at sort of amidst the strong market backdrop.
Sure.
I'll take that 1 I guess I'll, let me take that 1 and so look our retention is isn't a isn't a a nice spot on our retention and kind of Roes.
Pretty consistently for over a year and is now.
Now for a couple of quarters have been hanging out pretty near some of our historical.
Hi points and so we like that.
And that feels good and that speaks to our value proposition and speaks to the opportunities and again, we talked about gaining market share, it's our agents gaining market share and that's.
There's power to be and with our with our brands, especially on the luxury and that I talked about earlier and the call. So the repetitive and feel good and on the recruiting side.
We're.
And I don't think it's just the growth of the market at all like I think we've kind of been showing a consistent.
Increase.
Increase and.
And Asia.
<unk> count kind of pretty steady.
Kind of 2%, 3%, 4% kind of every single quarter and we recruit across the spectrum of agents, we have a lot of success recruiting people.
And in the middle of the pack and making them and to top quartile agents.
And our brands. So we like our results we think the kind of 4% is consistent with the kind of low single digit steady growth that we've been doing and we're always shooting for more but it's kind of a consistent thing that's been happening here and we like it and that's obviously part of why we're we're having the growth.
Across we have that are above the market.
Got it really helpful color on and thank you for that Ryan.
Second 1 on commission splits I think you mentioned a couple of mix issues.
And that impacted that number and the quarter and just curious if you could put any numbers around that number 1 and number.
To really just thinking about kind of the direction of the commission splits and the second half sort of in this market backdrop that you mentioned where housing volumes might be decelerating a little bit.
And just kind of broader thoughts on commission splits and it's that type of environment. Thank you.
Sure sure. So what we're seeing as we have been.
And saying is the agent mix, so the higher producing agents, which have higher splits normally are doing more of the transactions. This has been going on for about a year now and so you marry that up with significantly high volume and Youre going to get this increase and split theres a slight impact from geography. If you think of the markets that are.
Outperforming like Florida, and California, Theres, a bit of geographic mix as well.
And and so that's not different than what we have been seeing as far as it relates to the back half of the year. We begin to start lapping that so so that's what's going to benefit us and so we do expect there will still continue to be pressure on splits.
And really but as we start to lap some of the periods from last year, where we're already seeing the agent mix and the high volume it should abate a bit so that's probably the most I can share with you at this point.
Very helpful. Thank you Charlotte and thank you Ryan.
Thank you.
Next question comes from the line of Brian Mccarren, with Zelman and associates.
Hey, good morning, Charley great job on the quarter and thanks for taking the questions.
First question a bit of a 2 parter.
To the prior question, you're asked about the agent count and continuing to rise obviously good to see.
Your next I'm, just curious if you could speak a bit more about the competitive environment.
We've kind of seen some movements over time between always being very competitive but at times. It goes from very competitive 2 extremely competitive debt very competitive. So I guess the first part of my question is just any any recent changes youre seeing around the competitive dynamics that are playing into the agent recruitment.
And retention.
Relative to how you've spoken about those dynamics and the past.
No I wouldn't say, there's been any changes I think it was.
Kind of the pre work I would say it was more on that extremely competitive and then post we work it's been a little more of.
This is very competitive, but we are a big part of that competition.
And <unk>.
We're aggressive we like that we're growing our agents and we like and we're taking share.
And so it's tough out there and I don't think that Theres always been top of its industry.
And your point different funds lids, ratchet up even ratcheted it up even more but it's pretty tough.
It's been about.
The same right now as it's been for the last.
On a 12 to 18 months kind of thing I would say and we keep having our steady growth.
We've grown market share 4 quarters in a row, we think some of that or is the real success of our strategic initiatives. Some of thats, the leading position, we have and luxury so we like it but we watch the competitive stuff incredibly.
Closely but again were a big part of that and.
And with Charlotte talked about some of the investments, we're making and that area.
And we like it even if and even if and places.
Helping and contributes to our higher commission costs, we like the investments we like the financial returns and when you look at a quarter like this hopefully.
It's pretty clear that a whole day, everybody likes the financial returns.
Absolutely makes sense, Thank you Ryan and <unk>.
When you just digging in a little on that on the volume trends that you cited so for the open volume and June and July up 20, and up for year over year I believe.
Are you able to specify I know it kind of quantitatively sounds.
You're suggesting units are down which should be expected given the year ago comps and price ASP is still up but can you are you able to specify the magnitude of kind.
The unit declines that you're seeing relative to the.
Increases.
Yes, so I mean look what I would say June was was units and price up.
And as I said in Q2, our units were up more than price. So you can kind.
Net of apply that rough heuristic onto the June numbers for the opens for July and look I think for the July all of the growth is price period like for July month to date, what we've seen and all the growth is price now units went up so much in 2020 remember we were running it.
Like a low $5 million million kind of units.
As the housing market.
And in the last 12 months units have been more like $6 billion plus kind of thing. So what we're seeing and July is.
What kind of unit type and the same ZIP code and lease of the unit price strength.
And we've been seeing and then we're seeing some.
Some price appreciation, but what we don't have is the unit growth that we've been having.
As the whole sector transitions from 5 million to $6.1 million unit sales. So really you should think of july's.
Volume increases that we've seen so far is basically all our price versus 2020.
1 is right versus 2019, and the 42% that I gave you for July reported I team, that's a strong mix of unit and price, but so far and July what we've seen is.
And again to repeat myself units being.
Similar or maybe even a little down and places to last for last.
But we have been getting price appreciation and that is a change and I thought it was important enough to just bring it up and talk about.
And again it was a pretty strong surge in July of 2020. So if we could run at the July 2020 unit level.
And that feels pretty good.
Absolutely it makes sense.
And then if I can squeeze 1 more and just a high level and so on.
On the relocation business I guess I'm just curious because you have somebody a unique view into this and I am not really even asking for your business specific but more of and industry dynamics. So I guess do you see anything high level around like corporate decisions around work from home are returning to the office.
Within the relocation business because I guess there is a lot of debate around just how exactly is the royalty to work going forward is there going to be this ongoing shift to work from home or now that vaccines are more widespread do people come back to the office. So I'm just kind of curious of your high level view on what you might be seeing given given the relocation business you have and and the relationships with many corp.
Yeah, and don't look like and the first off a lot of the real stuff. We do is global which does not lend itself to work from home the same way.
Choosing between living and.
New Jersey, and Florida It does.
We are seeing things and when we talked about the reload business last with our board the number 1.
And kind of long term headwind for that industry is what you said right which is the.
How much of it at least the domestic part of trends.
That business.
And it goes away because of more work from home and we are seeing it and part of the reason I sit here and tell you I think work from home is.
More and here to stay thing.
And the average person would say is because of some of what we hear from our clients. There now, we're seeing green shoots and that business and other ways, especially the internet side, where.
Doing work from home if your job is around the world doesn't really work the same way or you can't really stay on the U S. If your job is and Asia, So I've been but.
Maybe there's even some green shoots on that on the business, but.
The headwind on that business in the U S from work from home as part of the reason.
I think the work from home thing has.
Maybe more legs and the average person and things so I am using that insight to happen to form that point of view, Ryan and then but again.
And in general that's a positive for Realogy overall because.
And that really enables that pushes people to live either and different houses or in different geographies and obviously, we benefit when that happens as we've been doing.
Absolutely helpful. As always thank you Ray.
Thank you Ryan.
Your next question comes.
From the line of Justin and just with Aaron Berg.
Hi, Thanks for taking the question.
I was just hoping to dig in a little bit on what your efforts have been around kind of boosting the attach rates for the title group.
And then a quick follow on after that please.
Sure look 1 of the things we've been talking about adjusted by the way welcome to the to the coverage of the company and our Strawberry and thank you and what are the things 1 other things. If you go back and read is we've really focused a lot on doing something thats not at all new for real estate, which is to capture more of the transaction economics.
Idaho from mortgage from insurance et cetera, and you can see it and our financials right and some of that and.
And mortgage for example was just the market would be and hard but some of it is us trying to do more and the efforts that you're talking about and so we've got a variety of efforts going on some of them the industry has been using.
From 20 plus years, but the biggest place we've been different Justin is.
Really focusing on on digital tools to make the transaction.
<unk> and I tell this story before.
For example, and 2018, we invested in.
Remote Notarize Asian company I think.
We were and anchor investor and we're like their anchor clients and we.
And nobody use effect and it wasn't even legal and most of the U S and terms of how the laws are written.
And then the pandemic hits and.
And everybody changes our lives and everybody starts using it for health and safety and then all of our agents.
And customers realize hey, this is a better experience. This is a much more seamless virtual experience, we can do and we start capturing more business and making more money as you can see on our P&L. So we're pretty focused on this stuff and even as I said on the call.
And on parts of America, just set up and <unk> been running this.
Our own kind of title business together called real tech to support the broader business. We're doing together because we think it's just a really important thing to kind of capture as much of that and that we can.
And so we're excited about what we've done.
And we're going to stay very strategically focused on it and even in last quarter.
Total I called that out as 1 of the places we are making strategic investments, we haven't changed those investments, but there was less new news about it and this quarter. So I didn't put it on my investment lifts to share with you this quarter.
Sure. Thanks, I appreciate the color and then kind of related to debt can you talk about.
And what Youre seeing and why the average fee per closing unit and the group jumped up I mean, I could have expected a little bit of growth but.
Getting to 2600 teams.
And outside to me.
It's the balance between purchase and refinance and the vast majority of our units are purchased units and we have stronger.
<unk> on the purchase units. So I think there's more disclosure on our presentation around that.
And if you want and we can follow up later too.
Alright, I appreciate that thank you.
Your next question comes from the line of Matt <unk>.
And with Compass point.
Hey, good morning, Congrats on a strong quarter, maybe 1 thinks about and Charlotte.
Just wondering.
Looking at capital allocation and I know you've reiterated your priorities there.
Closed the quarter at over $150 million and cash on the balance sheet I was wondering if you can just.
And I kind of maybe give a little bit of more and more detail about some of the strategic investments and maybe help out with the magnitude of some strategic investments that youre, making and the business whether that's.
On the real short side or.
And I know, you've flagged and investments.
And <unk> brokerage had as well thank you.
Sure. So first off we consistently have been investing and the business and.
And we spend a lot both on Capex and Opex and so there is a base level of investment, which you could say is anywhere between $100 million to $200 million a year. So that's just an ongoing thing which is stuff that we've been doing which is helping to drive the results.
And that we're seeing and then separately Ryan had mentioned the specific growth factors and so those are you could consider some of those to be incremental to what we had been doing and the past.
I wouldn't say that they would absorb all of the cash that we have on the balance sheet, which is why I tried to mention the debt paydown.
And that we will continue to focus on.
And.
To see more from US there, but so think of the stuff that Ryan has talked about is incremental to the baseline that we've seen and the business. If that's helpful.
Yes that is helpful. Thanks very much.
At this time there are no further questions. This does conclude today's conference. Thank you for your participation you may now disconnect.
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