Real estate companies Redfin and Compass lay off almost 1,000 workers as housing prices rise
With rising mortgage rates, Redfin and Compass — two real estate companies — announced on Tuesday that they are laying off staff, according to USA TODAY.
According to a blog post from Redfin CEO Glenn Kelman, 6% of the company’s staff has been laid off after the month of May fell 17% below expectations. That is approximately 470 employees, USA TODAY wrote.
“A layoff is always an awful shock,” Kelman wrote. “But mortgage rates increased faster than at any point in history. We could be facing years, not months, of fewer home sales, and Redfin still plans to thrive. If falling from $97 per share to $8 doesn’t put a company through heck, I don’t know what does.”
In Massachusetts, house prices are rising, as well. In May, a single-family home in Greater Boston was up by 15.1% from the previous year and is still continuing to climb, according to The Boston Globe.
All employees who have been laid off by Redfin will be receiving two to four months of severance pay and will be covered by the company’s health care for three months.
“We’re losing many good people today, but in order for the rest to want to stay, we have to increase Redfin’s value. And to increase our value, we have to make money. We owe it to everyone who has invested your time or treasure in this company to become profitable, and then very profitable,” Kelman wrote.
Compass is laying off 10% of their staff or 450 people, according to The Wall Street Journal.
“Due to the clear signals of slowing economic growth we’ve taken a number of measures to safeguard our business and reduce costs, including pausing expansion efforts and the difficult decision to reduce the size of our employee team by approximately 10%,” a Compass spokesperson told CNBC.