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Redfin laying off 8% of workforce due to ‘market conditions’ as real estate demand cools – GeekWire


(Redfin Photo)

Seattle real estate company Redfin announced Tuesday that it is cutting about 8% of its workforce, acknowledging that a housing downturn in the U.S. is hitting the company hard.

The company blamed “market conditions” in a Securities and Exchange Commission filing, and Redfin CEO Glenn Kelman said in a note to employees, which was posted on the company’s blog, that “a layoff is always an awful shock, especially when I’ve said that we’d go through heck to avoid one.” But May demand was 17% below expectations, he added, and fewer sales left the company with “less money for headquarters projects.”

The cuts will impact approximately 470 employees and are expected to be completed by the end of June. The number is closer to 6% of Redfin’s workforce when employees from RentPath and Bay Equity are factored in.

The real estate brokerage Compass also announced it was cutting 10% of its workforce Tuesday.

Redfin released an analysis on Monday showing that homebuyer budgets have essentially flattened. Up just 0.3% year over year nationwide in the three months ending April 30, it’s the slowest growth rate since June 2020. Declining budgets are a leading indicator that home-price growth has passed its peak and will slow in the coming months, Redfin reported.

“Mortgage rates increased faster than at any point in history,” Kelman wrote. “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.”

The company’s stock was down more than 4% on Tuesday.

Redfin previously cut 7% of its staff and furloughed hundreds of agents at the start of the COVID-19 pandemic in April 2020.

Redfin CEO Glenn Kelman at the 2018 GeekWire Summit. (GeekWire File Photo / Dan DeLong)

“We have broken our commitment to our people, twice now in three years,” Kelman said. “We can’t shrink from doing what’s best for the whole company, not just one part of it, today and every day. But I’ll spend the rest of my life wondering how I could’ve avoided these layoffs.”

His note detailed where the company would make cuts this time.

“We’ve already built tools for teams to work together on a transaction, so we need fewer engineers to add to those tools,” he said, adding that they’ll also spend less on analytics and user research. Groups that deal with recruiting, training and licensing will also be “hardest hit,” he said.

The company said the workforce reduction would lead to a pre-tax cash charge for one-time termination benefits, which consist of severance and related costs, between approximately $9.5 million and $10.5 million in the second quarter of 2022.

“We’re losing many good people today, but in order for the rest to want to stay, we have to increase Redfin’s value,” Kelman said. “And to increase our value, we have to make money.”

Redfin’s move matches that of Seattle trucking marketplace startup Convoy, which announced last week that it was cutting 7% of its workforce.

A bevy of tech startups have laid off employees and larger giants are slowing or halting hiring altogether, with a number of macroeconomic conditions including rising inflation causing concern for companies across sectors. Venture capitalists are advising tech companies to cut expenses and extend their cash runways. Stitch Fix and Bird are among those that also announced layoffs last week, and cryptocurrency exchange Coinbase cut 18% of its workforce Tuesday.


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