Due to the recent increase in interest rates from under 3% to over 6% in a matter of months, real estate industry giants Redfin and Compass announced yesterday large layoffs of 6% and 10% of their workforces, respectively.
At Compass this totals approximately 450 employees and 470 at Redfin.
The president of Refin, Glenn Kelman, said:
“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.”https://www.redfin.com/news/layoff/
Compass traded at $4,26 yesterday off 76% from its IPO price of $18 in 2021. Redfin traded at $8.13 per share down just under 92% after reaching almost $97 a share in 2021. Redfin’s stock also dropped substantially due its home buying program fueled by its Zestimates was found to be overpaying for a large number of homes leading to an inability for that division of the company to turn a profit.
Compass is expected to put an end at least temporarily to their geographic expansion and acquisition of establishes brokerages in certain markets to gain a quick foothold.