The Redfin CEO says, “I said we wouldn’t fire people unless we had to. We have to. ‘
Mary Ann Azevedo 16 hours
The housing market has had a big hit this year as mortgage interest rates have risen and homeowners have reduced their purchases.
The latest casualties in the proptech world are Redfin and Compass, which today announced layoffs totaling about 920 people.
In an email, a Redfin spokesman told TechCrunch that the company will lay off some 470 employees today after May demand was 17% below expectations.
Meanwhile, a Compass spokesman confirmed to TechCrunch that the company is downsizing by about 10% of its workforce, or about 450 people. “Due to the clear signs of slowing economic growth, we have taken a number of steps to safeguard our business and reduce costs, including the difficult decision to reduce the size of our staff by about 10%,” he said. .
Both Redfin and Compass are dedicated to helping people find and buy homes.
Mortgage interest rates rose to almost 6% this week, significantly higher than the 3% rate observed in 2021. Needless to say, the idea of buying a home is far less attractive than in recent years. . Combine that with overheated markets where prices have risen dramatically and many potential buyers are pausing their plans.
In a blog post, Glenn Kelman of Redfin said his company will host a brief meeting to address the move and that managers would call affected employees directly.
He wrote: “To all the people who are leaving who have trusted Redfin, I am sorry to be unable to maintain our commitment to you. With May demand 17% below expectations, we don’t have enough work for our agents and support staff, and fewer sales leave us with less money for headquarters projects. “
Kelman said the company offers laid-off colleagues 10 weeks of base pay, with an additional week of pay for every 12 months of service beyond a year, with a 15-week pay limit. Redfin said it is also paying the three-month health coverage bill for affected employees.
“That should give you until the end of the summer to find work,” he added. “… I said we wouldn’t fire people unless we had to. We have to.”
The executive acknowledged the irony of making a dismissal while raising hundreds of millions of dollars.
But mortgage rates rose faster than at any time in history. We could be facing years, not months, of lower home sales, and Redfin still plans to thrive, “he said. happens … We owe it to everyone who has invested your time or treasure in this business to make it profitable, and then very profitable.
Compass shares were trading at $ 4.42 per share at noon, below a 52-week high of $ 17.70. Shares of Redfin were down $ 8.16, compared to a 52-week high of $ 65.41. Its market capitalization is $ 874 million, while Compass is currently valued at $ 1,885 million.
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