Redfin is cutting another 13% of workforce

Job cuts amount to 13% of Redfin’s workforce, the company announced in a regulatory filing

SEATTLE – Online real estate brokerage Redfin is cutting 862 employees and shutting down its RedfinNow subsidiary offering instant cash services, another victim of two decades of high interest rates. by the Federal Reserve’s war on inflation.

The job cuts amount to 13% of Redfin’s workforce, the company announced in a regulatory filing. Redfin also laid off 470 employees in June, blaming slowing home sales.

Redfin has cut more than a quarter of its workforce since April 2022 on the assumption that the housing downturn will last “at least through 2023,” it said in the filing.

The average U.S. long-term mortgage rate is hovering around 7%, partly as a result of the Fed raising rates six times this year in an attempt to stave off four-decade high inflation. Fed officials raised their benchmark lending rate by three-quarters of a point in the last four meetings, spreading fears that their heavy-handed policy could push the US into a recession.

More rate hikes are expected next year, though inflation data from the government on Thursday could affect the Fed’s strategy.

Although the government recently estimated that the broader U.S. economy returned to growth last quarter, the Fed’s action has chilled a once red-hot housing market.

Home sales have slowed for the eighth straight month as first-time homebuyers pull out of the market, with borrowing costs dramatically curtailing their options and inflation eating away at their incomes. Homeowners looking to upgrade are also waiting for higher rates, not wanting to jump into higher rates on their next mortgage.

In its filing, Redfin said it expected to incur charges of up to $23 million for layoffs and layoffs, most of which are related to benefits and severance compensation. regarding dismissal.

Redfin is writing down $18 million worth of inventory related to RedfinNow, as homes have depreciated in value since they were purchased earlier this year. Redfin said it will continue to buy contract homes and renovate them and sell them quickly.

The Seattle company hopes to reduce its RedfinNow inventory to about $85 million in homes by the end of January 2023. The company currently has about $265 million in homes through RedfinNow, with $92 million in stock. other under the contract.

RedfinNow makes sellers quick to cash out their homes without having to list them.

Shares of Redfin fell more than 8% in morning trading. They have lost about 90% of their value this year and traded close to $100 a year less than two years ago.

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https://www.king5.com/article/money/markets/real-estate/redfin-layoffs-shutter-redfinnow/281-e0f734d8-f58b-4dca-a718-afee33d8410f Redfin is cutting another 13% of workforce

Edmund DeMarche

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