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The housing market appears to be slowing after a pandemic-induced frenzy, and real estate firms are pivoting in anticipation of a possible downturn.
As mortgage interest rates rise and home sales drop, Redfin and Compass are cutting their workforces. According to filings with the Securities and Exchange Commission, Compass will be cutting its workforce by 10%. Redfin, meanwhile, will be trimming its staff by 8%, which amounts to more than 400 employees from each company.
Compass stock is trading at about 75% less than its price in 2021. Redfin’s stock is down almost 92% since 2021.
Related: Redfin vs. Zillow: Which Online Real Estate Marketplace Stock is a Better Buy?
In a company-wide email, Redfin CEO Glenn Kelman shared his remorse about the decision. “I Said We Wouldn’t Lay People Off Unless We Had To. We Have To,” he wrote.
Kelman emphasized that while they tried to avoid layoffs, rising interest rates position the market for “years, not months, of fewer home sales,” and that “if falling from $97 per share to $8 doesn’t put a company through heck, I don’t know what does.”
Redfin’s layoffs target primarily user research and engineering positions. In his closing remarks, Kelman stated: “I’ll spend the rest of my life wondering how I could’ve avoided these layoffs. What’s most important now is treating the people leaving with humanity and respect.”
Compass, so far, has been less forthcoming about its layoffs. In their filing, the company says these actions are necessary to “improve the alignment between the company’s organizational structure and its long-term business strategy.”
Compass is also looking to cut costs by consolidating some offices.
Related: Never Let a Downturn Crush You
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