Compass dethrones Realogy as top brokerage in T3 Sixty Mega 1000

In a development that hints at major changes in the real estate landscape, Compass managed to dethrone Realogy last year to secure the top spot in the prestigious Mega 1000 ranking of real estate brokerages by sales volume, while eXp Realty scored first place for the number of transaction sides.

The 2022 list, out Thursday from real estate analysis and consulting firm T3 Sixty, shows that in 2021 Compass did more than $254 billion in volume. That put it just above Realogy, which did nearly $244 billion, HomeServices of America, at nearly $199 billion, and eXp, at about $156 billion. Those numbers also represent a meaningful reshuffling of the top places on the list; in 2020, Realogy took the top spot, followed by HomeServices of America, with Compass in third.

The upstart brokerage founded by Robert Reffkin managed to leap frog up into first place by increasing its sales volume in 2021 by an incredible 458 percent compared to 2018. By comparison, Realogy’s volume increased by just over 38 percent, while HomeServices of America grew volume by more than 46 percent.

The rankings, and the numbers they reflect, mark a major victory for Compass, which has become a lightning rod in the real estate industry both for its rapid growth as well as for polarizing practices related to things such as recruiting.

The other big winner in the new rankings is eXp. Though eXp didn’t do the most volume, it did take the first place spot for transaction sides, at more than 444,000. That’s up 495 percent compared to 2018. HomeServices came in second place for transactions sides, at more than 388,000, followed by Realogy, at more than 371,000, and finally Compass at more than 225,000.

Notably, HomeServices of American and Realogy saw their number of sides increase by about 12 percent and 10 percent, respectively, compared to 2018 numbers. Compass saw its number of sides jump more than 550 percent.

Outside of the top four companies, Redfin secured fifth place for sales volume by doing about $53 billion. Howard Hanna Real Estate landed in fifth place for transactions sides with more than 125,000.

In a statement, T3 Sixty also noted that the cohort of 1,000 largest brokerages in the U.S. appear to be getting more powerful. Specifically, in 2018 the cohort of large companies represented 44.9 percent of the total sales volume in the U.S. That number has grown each year since until hitting nearly 60 percent in the latest rankings.

Moreover, the 10 largest brokerages in the U.S. had 23.6 percent market share in 2021, up from 18.8 percent in 2020. The statement notes that the “growth in market share represents an increasing concentration of sales volume at the nation’s largest brokerages.”

The statement notes that “market share of transaction sides followed a similar pattern,” with large companies gradually taking more and more of the market.

The rankings from T3 Sixty are among the most closely watched and respected in the real estate industry, but they weren’t the only ones issued Thursday. Specifically, UrbanDigs launched a new quarterly ranking of Manhattan and Brooklyn brokerages that is based on sell-side sales volume. Realogy-owned Corcoran Group took the top spot in those rankings for having done $2.54 billion in contract volume. Compass came in a close second, with $2.51 billion in contract volume.

To some extent, the success of new companies such as Compass and eXp Realty on these kinds of rankings is likely a natural product of their relative newness. A company like Realogy, for example, is going to have a hard time growing its volume by 458 percent like Compass because it’s already well-entrenched and is not a fundamentally different company now than it was three years ago. Compass and eXp, on the other hand, were vastly smaller three years ago and have evolved over that period into behemoths. Which is to say, they simply had a lot more room to grow than did their legacy competitors.

But it’s also possible to read these numbers — which appear to be telling a similar story over multiple years — as signs of a critical inflection point in the real estate industry. Consider a possible analogy: Up through the 1990s, small book sellers were common in many American cities. Then big boxes such as Borders and Barnes and Noble came along, followed by Amazon. There are still small bookshops here and there, but big money and national organizations fundamentally changed the sector — even as reading, generally, remained popular.

Or another analogy: Also through the 1990s, most small communities had local newspapers, while bigger cities had several. Today, most of those smaller city papers are defunct, as are some of the bigger ones as well. Many cities, such as Denver, actually saw population growth during this period, which theoretically should have added to their newspapers’ customer base. But for a lot of reasons, news consumers have shifted to national outlets such as CNN and Fox News, while smaller local firms have withered.

Similar stories about national consolidation have played out in the restaurant industry, retail more generally, entertainment, and a variety of other fields.

In real estate, the debate is often about whether or not real estate agents themselves will stick around. The question is if they’ll go the way of travel agents.

But the soaring numbers and growing market share of big companies suggests a different question may be more relevant: Will real estate ultimately consolidate around a few national players in the massive way that the book selling, media and retail industries have? And if that happens, who is the real estate analog to Amazon, Borders, Target or The Shop Around The Corner?

Time will tell, but companies such as Compass and eXp — non-franchises with hot new compensation models, among other things — appear to be writing a new chapter in real estate that could end up looking different from what came before.

Here are the top 100 companies in the 2022 Mega 1000:

Email Jim Dalrymple II