Compass, Redfin to lay off hundreds as housing market cools
Real estate firms Compass and Redfin revealed plans to conduct layoffs on Tuesday as surging mortgage rates trigger a s𒀰lowdown i♈n the once-booming housing market.
Redfin’s regulatory filing cited “market conditions” in the firm’s⛎ decision to cut the company’s headcount by about 470 employees, with cuts to occur throughout the month of June.
CEO Glenn Kelman pro🌄vided further details in – noting tha🌳t the layoffs accounted for 8% of total staffers.
“With ꦑMay demand 17% 🎉below expectations, we don’t have enough work for our agents and support staff, and fewer sales leaves us with less money for headquarters projects,” Kelman said in the post.
“Mortgage𝓰 rates increased faster than at any point in history,” Kelman added. “We could be facing years, not months, of fewer home sales, and Redfin still plans to thrive.”
The average rate of a 30-year fixed rate mortgage was 6.28% as of Tuesday, according to data from . Rates were hoverin🐻g near 3.5% as recently as 🐼January.
Kelm𒐪an said the impacted workers would receive a minimum of 10 weeks of base salaryꦺ, as well as three months of health care coverage and severance pay equal to estimated value of lost productivity or sales bonuses for agent and support roles.
Redfin shares were down more than 5% in trading Tuesday afternoon. The stock has plunged nearly🀅 80% so far this year.
will impact about 10% of the company’s overall workforce, ꦇor approximately 450 workers, the company said in a regulatory filing. The filing noted that Compass is conducting a “wind-down” of Modus Technologies, a real estate software platform the company purchased in 2020.
“Due to the clear signals of slowing economic growth we’ve taken a number of measures to safeguard our business and𝓡 reduce costs, including the difficult decision to reduce the size of our employee team by approximately 10%,” a Compass spokesperson said in a statement on the decision.
Compass shares sank ab♊out 12%. The real estate giant’s stock is d🌳own about 56% so far this year.
Home sales and prices surged during the COVID-19 pandemic, fueled by lenient borrowing conditions and a dearth of available inventory. But interest rates have skyrocketed in recent months as the Federal Reserve an🏅d other central banks move to confront decades-high inflation.
Mortgage demand recently hit a 22-year low, according to data from the Mortgage Bankers Association. The volume of applications has declined as prospecꦍtive homebuyers react to the difficult financial climate.
Real estate isn’t the only ಞsector under pressure as the US economy teeters toward a potential recession.
Earlier on Tuesday, cryptocurrency trading firm Coinbase announced plans to lay off 18% of its workers — joining other crypto companies that have cut workers during a major downturn in digital assets.
Meanwhile, the S&P 500 fell into bear market territory this week — with some warning stocks still have much further to fall.
