In a surprise post on the company’s website, Redfin CEO Glen Kelman announced today the company will be laying off 6% of its workforce across all its businesses—amounting to about 470 employees, according to a Redfin spokesperson.
In a blunt, emotional blog post, Kelman wrote to the affected employees that he is “sorry we can’t keep our commitment to you.”
“A layoff is always an awful shock, especially when I’ve said that we’d go through heck to avoid one,” he wrote. “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.”
Almost at the same time, Compass announced in an SEC filing that it would be laying off 10% of its staff, in a “Strategic Action” that is meant to “take meaningful actions to improve the alignment between the Company’s organizational structure and its long-term business strategy. Compass will also reduce U.S. hiring and backfills, according to the filing.
In response from an emailed inquiry from RISMedia, a Compass spokesperson said the “difficult decision” to move forward with staff reductions and other measures was in response to “clear signals of slowing economic growth.”
Both Compass and Redfin have struggled this calendar year, with both emphasizing a push for profitability. Compass CEO Robert Reffikin said at the company’s Q1 earnings call that his goal was to “manage the business to ensure we will not require additional capital.”
Redfin, despite beating revenue projections in the company’s latest earning call, the Seattle-based real estate giant, also appears to be buckling under the weight of a shifting real estate market and broader economic uncertainty, with Kelman writing that the layoffs are simply because “we have to make money.”
“We’re losing many good people today, but in order for the rest to want to stay, we have to increase Redfin’s value,” he wrote.
Besides the larger landscape of fast-growing mortgage rates and inflation, Redfin also recently agreed to change its business practices following a fair housing related lawsuit that alleged some Redfin services were not offered equally to predominately non-white areas.
Kelman told investors at Redfin’s most recent earnings call that the policy change could result in selling more homes at a loss, while adding it would “not change the economics of the business much.”
Rental listing service RentPath, which Redfin acquired in 2021, was meant to be a priority going forward, Kelman said at the company’s Q4 earnings call in February. But the layoffs affected that company as well, along with lender Bay Equity, another Redfin acquisition which was finalized in April of this year—though Kelman didn’t say exactly how many of the affected employees were from these businesses.
The Redfin spokesperson said they did not have a breakdown of how much each business unit of the company was affected, only that the layoffs were “distributed across the company.” Kelman wrote that engineers, and the areas of “analytics and user research” would be “hardest hit today.”
“The other major difference between Redfin and other brokers is our level of investment in software and support, which includes coordinators and support agents as well as field managers, renovators, lenders, offer specialists and title specialists,” Kelman wrote. “Our software and support are the industry’s best. But if our agents, lenders and customers wouldn’t themselves pay for an improvement in our software or support, preferring instead to work with a company with less overhead and better economics, we can’t pay for that improvement. This is a discipline that we need every leader, not just execs, to embrace.”
Kelman also seemed to suggest that Redfin would be focusing on tours, iBuying and its brokerage services going forward. In a subhead of the post titled “What We’re Still Funding,” he wrote that the company is looking for “agents who can be an engine of the company’s growth.”
“Any agent can meet her first customers through Redfin.com, but our best agents cultivate repeat and referral sales via those customers over time,” he added.
Editor’s note: This story was updated at 3:00 p.m. Eastern Time with a statement from Compass.
Jesse Williams is RISMedia’s associate online editor. Email him your real estate news to jwilliams@rismedia.com.
