Welcome to the fall Boston condo for sale season. With summer over, and real estate agents back at their desks, any economic clouds we have been able to ignore while on vacation loom larger now.
Ever notice that the fall brings economic clouds. Think back to the fall of 2008 (the collapse of Lehman Brothers), 1987 (Black Monday) and 1929 (the crash that signaled the beginning of the Great Depression). All happened in the fall.
Even without stock market volatility, the beginning of fall is always a litmus test for where the real estate market is at after the seasonal summer slowdown.
Could we see a crash? unlikely. However, we certainly seem to be teetering on the edge of a recession, with the Fed seeking to curb inflation by raising interest rates, and in the process slowing down the economy and the Boston condo for sale market.
Here in downtown Boston, condominium sales activity has cooled, rents are starting to plateau, office leasing is weak.
When it comes to real estate worries, there’s no bigger story in the residential brokerage world than Compass’ current struggles.
The firm went public with a market cap of nearly $7 billion last year, only to plummet to a $1 billion market cap as of press time. Its losses in the 18-month period since January 2021 total nearly $800 million, and it’s looking to shed over $300 million in expenses this year.
Compass has done multiple rounds of layoffs and taken a harder line on agent commission splits. But can it move fast enough to stanch the bleeding?
The 28,000-agent company has long been criticized as an emperor with no clothes (or at least a scantily clad king) — a tech-infused brokerage with little in the way of actual tech. Instead, it seems to many like a traditional brokerage.
Some critics say that Compass has mainly been in the business of raising money, not actually innovating. As appraiser Jonathan Miller recently noted, the huge amounts of VC funding the company received from SoftBank made it a “disruptor by capital, not by innovation or design.”
Yes, two major money managers, BlackRock and Vanguard, have upped their stock in the brokerage now that it can be bought on the cheap.
Check out the series of articles that look inside the firm’s woos.