Source: Geek Wire —
The U.S. housing market continues to show signs of weakening, impacting Seattle real estate tech companies such as Zillow Group and Redfin. And the trend may continue.
“We think that the housing market could get worse,” Redfin CEO Glenn Kelman said during the company’s earnings call Wednesday. “We haven’t seen U.S. home sales dip below 4 million units a year in decades — and the U.S. population has grown.”
Redfin missed its third quarter earnings expectations and earlier Wednesday announced it would lay off employees for the second time this year, eliminating 862 positions, or 13% of its workforce.
The company also said it plans to shut down its home-flipping “iBuying” program RedfinNow.
The cost-cutting measures are a response to a broader housing market downturn due in part to rising inflation and mortgage rates. Single-family housing starts, which indicates the groundbreaking of a new home foundation, dropped nearly 19% in September. The amount of building permits allocated fell 17%. And existing-home sales are down nearly 24% from the same period last year.
“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,” Kelman wrote in a memo to employees Wednesday. “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.”
Redfin axed 8% of its workforce in June. The company’s headcount has dropped 27% since April.
“Housing companies are in the jungle now, but Redfin has been there before and come out stronger,” Kelman said in a press release detailing the earnings.
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