Two of the nation’s biggest real estate companies are laying off a substantial amount of their staff. Redfin will eliminate eight percent of its staff and Compass will cut 10 percent of its workforce. Both are the largest residential brokerage firms in the United States. In announcing the layoffs, both companies said that they were not a reflection of a lack of work.
Redfin and Compass real estate companies lay off employees
Both Redfin and Compass real estate companies announced last week that they are laying off hundreds of workers, cutting almost 10% from their workforces. While the layoffs will not affect actual agents, they will likely result in a slower pace of growth and fewer transactions. As a result, they have paused their hiring plans for growth and mergers and acquisitions until 2022.
Mortgage interest rates have skyrocketed, pushing some people out of the housing market. This is not the first time mortgage interest rates have risen in recent months, with the 30-year fixed-rate Forbrukslån – Søk Hos 25 Banker Med Kun 1 Søknad ~ Finanza mortgage now at 5.2%, up from 2.8% at the beginning of the year. Mortgage demand has fallen to its lowest levels in 22 years, with applications falling 6.5% last week.
Opendoor Technologies also lays off employees
Its shares have rocketed more than 25% after its quarterly earnings call and have been added to the Best Ideas list of Wedbush. The company also raised $850 million in a secondary covered call offering, adding to its balance sheet. It currently has $2.65 billion in cash and $4.3 billion in non-recourse asset-backed facilities. This news comes as Wall Street analysts continue to warn of an impending housing collapse, and investors should be wary of putting their money into such a stock.
But Opendoor has a different view of the housing crisis. Although it raised over $1 billion in funding in the last couple of years, the company is now struggling to cope with the consequences of the coronavirus. A wave of iBuyers have canceled their contracts and made severance payments, leaving many home sellers with two mortgages. As a result, the company has laid off about three-fifths of its workforce. It’s unclear how long it will continue to operate, or even whether it will even exist once the economy starts recovering.