Real estate brokerages Compass and Redfin are laying off staff, a sign that the housing market is cooling as higher interest rates make mortgages more expensive and rising inflation pressures income.
Glenn Kellman, CEO of Redfin, announced a cut of about 8 percent of the company’s workforce in Send an email to employees On Tuesday, it cited a dip in demand, which was 17 percent lower than expected last month.
“Today’s layoffs are the result of the Redfin revenue shortfall, not the people who were laid off,” Kellman said. Redfin employed about 6,500 people at the end of 2021.
A Compass spokesperson said in a statement that Compass is laying off 10 per cent of its employees “due to clear indications of slowing economic growth”. Compass employed about 4,800 people at the end of 2021.
Declining home sales and rising mortgage rates have hampered the housing market, adding to the pressure on the real estate industry. The 30-year mortgage rate rose to 5.65 percent, the highest level since 2008 Mortgage Bankers Association He said on Wednesday.
“With mortgage rates above 5 percent, refinancing activity continues to be down more than 70 percent from last year,” said Joel Kahn, associate vice president of economic and industry forecasts at the group.
Redfin offers employees up to four months of severance pay, according to an email sent by Mr. Kellman. He said he expected gradual and slower growth in what he called a “housing decline”. Redfin shares are down nearly 80 percent over the past six months.
“We may face years, not months, of fewer home sales,” Mr. Kellman wrote to employees. “If the drop from $97 per share to $8 doesn’t crash the company, I don’t know what’s going on.”
“Twitteraholic. Total bacon fan. Explorer. Typical social media practitioner. Beer maven. Web aficionado.”