Layoffs hit the brokerage world Tuesday, with Compass and Redfin announcing they were cutting hundreds of employees amid a cooling housing market and stock market correction.
The company will also pause mergers, acquisition activity and new market expansion for the rest of the year.
Redfin’s layoffs amount to approximately 470 employees, or approximately 8 percent of its total employees, according to SEC filings. The company noted the cuts amount to 6 percent of its workforce including RentPath and Bay Equity. It expects to complete the reduction by the end of June.
In an internal statement, the company cited falling home sales and “a historic jump in interest rates.” The average 30-year fixed mortgage rate is flirting with 6 percent, twice what it was just a few months ago.
In an email to staff, CEO Robert Reffkin similarly cited inflation and increasing interest rates for the cuts.
“As leaders in the real estate industry, you are on the front lines seeing the current economic trends take shape before they hit the rest of the economy, so it’s no surprise to you that the economic environment has consistently worsened over these last few months,” Reffkin wrote.
The chief executive said the affected roles were largely “on teams that do not directly support agents.”
In May 2020, the brokerage giant laid off 375 employees, or 15 percent of its staff, citing the pandemic. Redfin also went through a major furlough that year, with 41 percent of its agents being let go.
In May, Compass reported a first quarter loss of $188 million, with $1.4 billion in revenue for the quarter, up 25 percent from the same period a year ago, against $1.6 billion in expenses.
At the same time, Compass added 398 principal agents in the first quarter, bringing its total to 12,574.