The layoff bug that’sis also infecting the real estate industry with Redfin announcing it will ax 862 jobs this week.
That figure represents 13% of Redfin’s workforce, the real estate data company said in email posted on its website. About 264 of the jobs being cut are at RedfinNow, the house-flipping arm of the company that launched five years ago. Redfin said it plans to spend the coming months dismantling RedfinNow, adding that homes purchased from the unit lost $18 million in value during the third quarter.
“Winding down RedfinNow is a strategic decision we made in order to focus our resources on our core businesses in the face of the rising cost of capital,” Redfin said in a regulatory filing Wednesday.
The job cuts this week come after Redfin laid off 470 employees in June, citing slowdowns in the housing market.
Redfin didn’t immediately respond to a request for comment on Wednesday.
Cooling housing market
The Seattle-based company is laying off employees as the U.S. housing market is cooling down from its white-hot activity earlier this year. Mortgage rates have grown every month since this spring, causing many would-be homebuyers to sit on the sidelines. The combination of today’s mortgage rates with higher home prices compared to last year has priced some buyers out of the market, economists have said.
The average interest rate on a 30-year fixed rate mortgage hit 7.14% this week, data. The number of homes sold has decreased for the past eight months, according to the National Association of Realtors.. Pending home sales dropped 35% in October compared to a year prior, according to Redfin
Hoping to entice a dwindling pool of buyers, some sellers across the Sunbelt and the South. Economists expect mortgage rates to climb higher next year as the Federal Reserve continues its battle with soaring inflation.
Redfin said in its regulatory filing that it eliminated jobs expecting “a housing downturn that lasts at least through 2023.”
Not just Redfin
Changes in the housing market aren’t just affecting Redfin. Realtor.com as well as mortgage lenders Better and LoanDepot have also eliminated positions in recent months. Better has been through four rounds of layoffs this year, according to HousingWire, while LoanDepot said in July it will eliminate 4,800 positions this year.
Redfin’s rival Zillow has also slashed hundreds of jobs recently, laying off about 300 employees last month. The cuts represent 5% of Zillow’s workforce, Bloomberg News reported. Zillow announced plans last year to lay off about a quarter of its staff after its home-flipping unit lost more than $420 million, the New York Times reported.
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 read.
Real estate data firm Compass saw two rounds of layoffs this year — cutting about 450 positions in June and a “significant portion” of its product and engineering team in September. The New York-based company didn’t disclose exactly how many positions were cut in September.