Redfin and Compass laid off more than 900 employees as mortgage rates continue to rise – TechCrunch

Redfin CEO says, “I said we wouldn’t lay off employees unless we had to. We should, we should.”

housing market It took a huge hit this year as mortgage interest rates rose and homeowners cut back on their purchases.

The latest victims in the proptech world are Redfin and Compass, who today announced layoffs totaling about 920 people.

In an email, a Redfin spokesperson told TechCrunch that the company is laying off about 470 employees today after demand in May missed expectations by 17%.

Meanwhile, a Compass spokesperson confirmed to TechCrunch that the company is cutting about 10% of its staff, or about 450 people. “Given clear signs of slowing economic growth, we have taken a number of measures to protect our business and reduce costs, including the difficult decision to reduce our staff size by approximately 10%,” he said.

Redfin and Compass both help people find and buy homes.

Mortgage interest rates rose to nearly 6% this week, well above rates of less than 3% in 2021. Needless to say, the idea of ​​buying a home is much less attractive than it has been in recent years. Combine that with frenetic markets where prices have skyrocketed, and many potential homebuyers have paused their plans.

In a blog post, Redfin’s Glenn Kellman said his company will host a briefing all hands meeting to address the move and that managers will contact affected employees directly.

he wrote:To all of you who have put your trust in Redfin, I’m sorry we can’t live up to our commitment to you. With May order below expectations at 17%, we don’t have enough work for our agents and support staff, and lack of sales leaves us with less money for headquarters projects.”

Kellman went on to say that the company is offering laid-off colleagues 10 weeks of base pay, with an additional week’s pay for every 12 months of service after one year, up to a maximum of 15 weeks of pay. Redfin said it will also bill for three months of health care coverage for affected employees.

“That should give you until the end of the summer to find work,” he added. “…I said we wouldn’t lay people off unless we had to. We should, we should.”

The CEO continued to acknowledge the irony of the layoff procedure despite raising hundreds of millions of dollars.

But mortgage rates are rising faster than ever. We may have years, not months, of declining home sales, and Redfin still plans to thrive,” he wrote. “If the drop from $97 per share to $8 doesn’t put a company on hold, I don’t know what happens… We owe it to everyone who invested your time or fortune in this company to become profitable, and then very profitable.

Compass stock was trading at $4.42 a share at midday, down from a 52-week high of $17.70. Redfin shares fell to $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 billion.

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