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Tags: redfin | shutters | home | flipping | business | amid | layoff

Redfin Shutters Home-Flipping Business Amid Layoffs

By    |   Wednesday, 09 November 2022 08:24 PM EST

Online real estate broker Redfin said it is shutting down its home-flipping business and laying off 13% of its workforce, a total of 862 employees, bracing for impact as the housing market rapidly decelerates.

"To prosper in a housing downturn that could last at least through 2023, we have to simplify our business," Redfin CEO Glenn Kelman said in a statement published by Axios. "We're closing our iBuying business, RedfinNow, because maintaining a profit with rising interest rates would make our offers on homes insultingly low."

In a statement to employees provided by Business Insider, Kelman said 218 additional workers can choose over the next few days to stay at Redfin in another role; but if all of those were to leave, the workforce reduction would be 16% in November and 29% since April. In June, Redfin laid off 470 employees, blaming slowing home sales.

"A layoff is awful, but we can't avoid it," Kelman wrote to employees. "We plan to keep increasing our share of the market, but that market in 2023 is likely to be 30% smaller than it was in 2021. The June layoff was a response to our expectation that we'd sell fewer houses in 2022; this layoff assumes the downturn will last at least through 2023."

Mortgage rates are at a 20-year high, at 6.95% for a 30-year fixed rate, according to Freddie Mac, as inflation has soared to its highest level in four decades. The Federal Reserve has raised its short-term interest rate six times this year, according to Forbes, as it tries to lower inflation.

Redfin's struggles are another sign of a further rollback of tech-savvy real estate companies' position as big players in the home-flipping business.

Zillow shut down its home-flipping business in November 2021, well ahead of the housing market's broader pullback, and cut 25% of its workforce. The company ended up losing $881 million in its home-flipping operations in 2021.

Active home listings soared 33.5% in October, compared with a year earlier, hitting the highest point since 2020, according to Realtor.com. That means more competition for home flippers, who had been taking advantage of depressed inventory.

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Online real estate broker Redfin said it is shutting down its home-flipping business and laying off 13% of its workforce, a total of 862 employees, bracing for impact as the housing market rapidly decelerates.
redfin, shutters, home, flipping, business, amid, layoff
360
2022-24-09
Wednesday, 09 November 2022 08:24 PM
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