Layoffs have been sweeping the technology industry, and now the real estate world is caving too.
In filings with the U.S. Securities and Exchange Commission, real estate companies Redfin and Compass revealed that they would be laying off 8% and 10% of their staff, respectively.
Both companies saw their stocks plummet, with Redfin hitting a 52-week low.
Affordability has become intangible for many today, with mortgage demand hitting its lowest level in over two decades. According to Mortgage News daily, rates have grown to 6.28% from the 3.29% seen in January.
“Due to the clear signals of slowing economic growth we’ve taken a number of measures to safeguard our business and reduce costs, including pausing expansion efforts and the difficult decision to reduce the size of our employee team by approximately 10%,” said a Compass spokesperson.
According to Redfin CEO Glenn Kelman, demand was 17% below expectations, limiting the amount of work for the company’s agents and support staff.
“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,” said Kelman.
Threats of a recession have led many companies to make this shift.
Skyrocketing demand seen at the beginning of the year led companies to go on hiring sprees, but as inflation leaves consumers clutching their wallets, businesses have been forced to reconcile with the fact that they may have overhired.