When it came to regulatory review of the Compass–Anywhere merger, the normal process was upended. Instead of facing a full antitrust investigation, the deal was cleared after Compass and its legal team bypassed career antitrust staff and appealed directly to senior leadership at the Department of Justice, successfully preventing a deeper probe and allowing the transaction to close in early January 2026.
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The outcome was not a routine clearance. It was a regulatory decision that breaks from recent antitrust enforcement norms and raises serious questions about how competition policy is being applied to consolidation in residential real estate.
As lawmakers, consumer advocates and some career antitrust enforcers warned of potential harm to homebuyers and independent brokerages, the merger moved forward without the level of scrutiny many believed the transaction warranted.
In most industries, large mergers follow a well-established analytical framework. Federal antitrust authorities review the transaction, calculate market shares and apply standard concentration metrics — most notably the Herfindahl-Hirschman Index (HHI) — to determine whether a deal is likely to harm competition.
Residential real estate, however, is structurally different. HHI does not capture market power in real estate the way it does in other industries because competition is exercised through transaction participation, not simply market share.
Regulators may have assessed Compass’s post-merger market share using conventional metrics. What appears far less likely is that they accounted for the percentage of transactions in which Compass would now be involved. By evaluating this merger like any other industry, regulators may have significantly understated the competitive power they were allowing a single firm to accumulate.
How market share is measured
The Herfindahl-Hirschman Index (HHI) measures how concentrated a market is based on the relative size of its participants. In most industries, this approach works reasonably well because each unit of market share is assumed to correspond to a similar level of competitive influence.
In a two-sided real estate market, however, firms can participate in transactions from either side, effectively multiplying their market presence.
For brokerages, market share is most often discussed in terms of transaction sides, not transactions. Each representation — buy side or sell side — counts as one unit. A brokerage that represents both sides of a transaction records two sides.
This convention is deeply embedded in MLS reporting, commission accounting and industry rankings. Side-based market share treats each side as independent. From a competitive perspective, however, what matters is how often a firm is present in a transaction at all.
A firm with a 15 percent market share measured by transaction sides does not necessarily participate in only 15 percent of transactions. Participation depends entirely on how those sides are distributed. In the unlikely scenario that a brokerage double-sides every deal, 15 percent of transaction sides would translate into participation in just 15 percent of transactions.
But if the brokerage represents only one side of each transaction, the same 15 percent share would result in participation in 30 percent of all transactions. This dynamic amplifies market power in real estate and, if not carefully considered, can materially understate the influence a firm may exert after a merger.
Implications of market power
Based on publicly reported data and industry analyses, Compass is estimated to have 13 percent to 18 percent market share nationally following the transaction. A Dec. 26, 2025, analysis by The Capitol Forum found that the merger would result in market share concentrations “well above presumptively illegal thresholds” in at least a dozen states. Under 2023 Merger Guidelines, market shares at or above 30 percent, particularly in already concentrated markets, are potentially unlawful.
Available estimates indicate Compass would exceed 30 percent market share in numerous large metros, including:
- Los Angeles: 40 percent
- Raleigh: 46 percent
- Houston: More than 50 percent
- Austin: More than 50 percent
- Honolulu: 54 percent
- Seattle: 57 percent
- Denver: 60 percent
- Boulder: 60 percent
- Brooklyn: Over 60 percent
- Washington, D.C.: Over 60 percent
- Boston: Over 60 percent
- San Francisco: 64-65 percent
- Nashville: Close to 70 percent
- Newport Beach, California: Over 80 percent
- Manhattan: Over 80 percent
The regulatory significance becomes clearer when those figures are translated into transaction participation rather than transaction sides. Using transaction-side mechanics, a firm with 15–20 percent share of transaction sides can reasonably be expected to participate in roughly 30 percent of transactions.
In markets where a firm controls 50-60 percent of transaction sides, it is mathematically possible — and often likely — that the firm participates in a majority of all transactions. That level of participation begins to resemble industry dominance rather than ordinary competition.
Applying this lens, it becomes apparent that traditional market-share metrics may significantly understate a brokerage’s market power. As a result, this merger could lead to levels of market participation that create unlawful competitive effects across many markets, with concentration in certain metros far beyond accepted limits.
A new look at competition
The Compass–Anywhere merger’s survival of antitrust review exposes a fundamental weakness in how competition policy is being applied to residential real estate. Regulators permitted a transaction that allows a single firm — Compass — to participate in a majority of transactions across many of the country’s largest housing markets.
Even under traditional market-share analysis, industry experts were already warning of emerging anti-competitive conditions. When viewed through the lens of transaction participation, those warnings become far more severe.
This outcome raises an uncomfortable conclusion. Either regulators failed to account for how market power actually manifests in a two-sided real estate market, or they did — and allowed the merger to proceed anyway.
In either case, the result is the same: Conventional antitrust tools such as HHI and transaction-side market share proved insufficient to measure the real competitive effects of consolidation. When a firm participates in a majority of transactions in a market, it does not merely compete — it shapes norms, access and outcomes.
If antitrust enforcement does not evolve to reflect these dynamics, this merger will not be an exception — it will be a precedent. Without recalibrating how market power is measured, future consolidations — potentially even larger in scale — will continue to clear regulatory review while quietly transforming competitive conditions in U.S. housing markets.
By the time traditional metrics signal a problem, the market may already be beyond repair.
Sean Frank is the founder and CEO of Mainframe Real Estate in Florida. Connect with him on Instagram and LinkedIn.
