Redfin lays off 862 employees as housing market cools

truncation bug which is Attack on major tech companies Infecting the real estate industry as well, Redfin announced it would eliminate 862 jobs this week.

The figure represents 13% of Redfin’s workforce, the real estate data company said in an email posted on its website. About 264 jobs are being cut at RedfinNow, the house-flipping arm of the company that launched five years ago. Redfin said it plans to eliminate Redfin Now in the coming months, adding that homes purchased by the unit lost $18 million in value during the third quarter.

“Closing RedfinNow is a strategic decision we made to focus our resources on our core businesses in the face of rising cost of capital,” RedfinNow said in a regulatory filing on Wednesday.

Redfin cut jobs this week after laying off 470 employees in June, citing a slump in the housing market.

cooling housing market

The Seattle-based company is laying off employees as the US housing market cools off from its white-hot activity earlier this year. Mortgage rates have risen every month since this spring, leaving many home buyers sitting on the sidelines. Economists have said the combination of today’s mortgage rates with higher home prices than last year has driven some buyers out of the market.

The average interest rate on 30-year fixed rate mortgages this week touched 7.14%, its highest level since 2001, According to data from Redfin, pending home sales fell 35% in October compared to a year ago. According to the National Association of Realtors, the number of homes sold has decreased over the past eight months.

Some sellers in the Sunbelt and South, hoping to entice a dwindling pool of buyers have lowered their asking price, Economists expect mortgage rates to rise next year as the Federal Reserve continues its battle with rising inflation.

Redfin said in its regulatory filing that it “eliminated jobs in anticipation of a housing recession that lasts at least 2023.”

“We are laying off employees beyond RedfinNow as we expect to sell fewer homes, even as we continue to take market share,” Redfin CEO Glenn Kellman said in a statement to CBS Moneywatch on Wednesday. “None of this makes layoffs any less heartbreaking.”

not just redfins

Changes in the housing market aren’t just affecting Redfin. as well as mortgage lenders Better and LoanDepot have also eliminated positions in recent months. According to HousingWire, this year has been better through four rounds of layoffs, while LoanDepot said in July that it would eliminate 4,800 positions this year.

Redfin rival Zillow has also cut hundreds of jobs recently, laying off nearly 300 employees last month. Bloomberg News reported that the cuts represent 5% of Zillow’s workforce. As the New York Times reports, Zillow announced plans to lay off nearly a quarter of its employees last year after its home-flipping unit lost more than $420 million.

In a statement to CBS Moneywatch, Zillow said the layoffs would allow the company to grow its “housing super-app.” Zillow is still hiring for tech-focused jobs, the statement said.

Real estate data firm Compass saw two rounds of layoffs this year – a cut of about 450 positions in June and a “significant portion” of its product and engineering team in September. The New York-based company did not disclose how many positions were cut in September.

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