As inflation hit 8.6% in May and mortgage rates skyrocketed past 6%, as of mid-June, real estate brokerages and services are tightening their belts.
17 and Counting
A whole slew of real estate brokerages and services has recently announced their intentions to reduce their staffs and workers. The combined effects of the lightning fast runup in mortgage rates, global economic uncertainty and stock market volatility have prompted industry experts to “revise,” some might say downgrade, their forecasts for 2022 and 2023 home sales and mortgage originations.
Thus far, most of the announced layoffs have hit companies which provide mortgages, title and closing, and real estate tech services. But “most” is not all.
On June 14, two big-name real estate brokerages, Compass and Redfin, announced they were cutting sizeable portions of their respective workforces. Likewise, any expansion plans these real estate firms have had in any part of their respective operations have been put “on hold for the time being.”
Below are the companies who have already announced downsizing plans as of June 14.
CEO Robert Reffkin announced in mid-June that Compass was laying off 10% of its workforce, about 450 employees. Supposedly, full-time staffers, not agents, are to bear the brunt of these layoffs.
Due to a drop in demand of 17%, CEO Glenn Kelman announced a shearing of 8% or nearly 500 people including agents, engineers, recruiters, trainers and additional support staff on June 14. Likewise, Redfin’s mortgage business, Bay Equity Home Loans, also delivered pink slips to 121 existing workers in sales support, capital markets and operations.
REX Real Estate
REX had already implemented two rounds of layoffs during 2021. In May of 2022, this discount brokerage closed two offices in Texas. REX cofounder and COO Lynley Sides told RealTrends the firm was pivoting to brokering deals in California and Florida for institutional investors.
In lieu of layoffs, the country’s largest mortgage lender has made buyout offers to some 2,000 workers. If accepted, the buyouts are expected to save the company about $180M/year, according to a Q1 earnings call.
Side notified 10% of its employees that they were out of a job on June 1.
This mortgage fintech outfit cut its workforce by nearly 33% on May 31. Founded by former Zillow executives to focus exclusively on purchase loans, CEO Greg Schwartz said the company was putting any expansion efforts to additional markets on hold.
With revenue from home lending down -33% y/y to $1.49B, executives had already laid off an “unspecified” number of workers in its mortgage division in April.
This second biggest mortgage lender after #1 Rocket laid off 236 workers from six locations in California during May.
At the end of 2021, this mortgage company had 8,200 employees. The company announced 250 layoffs during Q1 2022 and another 420 layoffs during Q2, a decrease of at least -8%.
With a reported Q1 2022 loss of $91.3M, CFO Patrick Flanagan cautioned in March 2022 that “headcount reductions” are one facet of “aggressively” managing costs with the intention of returning to profitability by the end of 2022.
Power Buyer Knock announced layoffs of 115 employees, approximately 46% of its workforce, in March 2022.
Keller Williams’ lending arm Keller Mortgage laid off 150 recruits in October and laid off additional workers, unspecified, at the end of May. Despite these layoffs, the company continues to advertise for remote loan officers around the US.
This flat-fee brokerage firm laid off 119 employees, approximately one-third of its workforce, in February. The company cited limited housing inventory as the reason for reducing its numbers.
This digital title, escrow and closing provider announced that it would reduce its workforce by approximately 15% or 310 employees in May.
Known to many agents for its joint ventures with Realogy Holdings Corp, @properties and Compass, this company laid off 348 employees and closed its third-party wholesale channel, Stearns Wholesale Lending, in January after acquiring Stearns Holdings LLC in January 2021.
Better Holdco Inc. founder and CEO Vishal Garg laid off 900 employees in December 2021 via a Zoom call. In March 2022, Better Real Estate LLC, Better’s real estate brokerage subsidiary, laid off another 3,000 workers.
Blend Labs Inc. announced in April that it was laying off 200 employees, about 10% of its workforce.
That’s it for now, everyone.
Thanks to Inman.
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