- Redfin lets go of about 470 workers or 6% of its staff.
- Compass is releasing about 450 workers, equaling 10% of its staff.
- Both companies saw its stock drop ranging from 5% to 10%.
Anticipating home sales cooling nationwide and rising interest rates, two renowned real estate firms laid off hundreds of workers Tuesday.
Property technology companies Redfin and Compass announced the layoffs that total more than 900 staffers in separate announcements.
In a blog post, Redfin CEO Glenn Kelman said his company is laying off about 470 employees, about 6% of its workforce after the demand in May came in 17% below expectations.
“We raised hundreds of millions of dollars so we wouldn’t have to shed people after just a few months of uncertainty,” Kelman said. “But mortgage rates increased faster than at any point in history. We could be facing years, not months, of fewer home sales, and Redfin still plans to thrive. If falling from $97 per share to $8 doesn’t put a company through heck, I don’t know what does.”
Meanwhile, Compass confirmed to USA TODAY in an email the firm is letting go of about 450 people, equating to 10% of its staff.
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The layoffs come as the once-hot housing market is starting to cool as high mortgage rates and inflation rates of about 6% dominate. Both companies saw their stock fall Tuesday as Redfin was down nearly 5% and Compass was down more than 10%, respectively.
Kelman said Redfin is giving the laid-off staffers 10 weeks of base salary, with an additional week of pay for every 12 months of service beyond one year, capped at 15 weeks of pay. The Seattle-based firm added it is also providing three months’ worth of healthcare coverage for its former workers, which should carry them through the end of summer, Kelman said.
“Today’s layoff is the result of shortfalls in Redfin’s revenues, not in the people being let go, but before now our culture has been making an important shift toward performance and profits,” Kelman said.
Meanwhile, a Compass spokesperson said in an email: “Due to the clear signals of slowing economic growth we’ve taken a number of measures to safeguard our business and reduce costs, including pausing expansion efforts and the difficult decision to reduce the size of our employee team by approximately 10%.”