Boston Condos for Sale and Rent
Compass and Refin Announce Layoffs
Two major real estate firms are slashing their workforce amid a cooling housing market: Compass and Redfin. Compass is laying off 450 employees, 10% of its current staff, while Redfin is cutting 470 employees, about 8% of its current staff.
The announcements come amid months of rising rates, high home prices — and growing fears that home sales will continue to decline. As the news broke Tuesday, shares of both Compass and Redfin fell with Compass temporarily pausing trading on the New York Stock Exchange. (It resumed in the afternoon.) Meanwhile, Redfin’s stock plummeted to a 52-week low.
“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%,” a Compass spokesperson said.
Those layoffs will contribute to an up-front estimated cost of $21.5 million to $23 million, before taxes, in the second quarter, the company said in a filing with the SEC. “These strategic actions are part of a broader plan … to improve the alignment between the company’s organizational structure and its long-term business strategy,” the filing stated.
Redfin’s own filing came with an attachment by CEO Glenn Kelman. “With May demand 17% below expectations, we don’t have enough work for our agents and support staff, and fewer sales leave us with less money for headquarters projects,” he wrote. “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.”
Unlike Compass agents, who work primarily off commission, Redfin agents are paid a base salary from the brokerage. It wasn’t immediately clear how, or whether, the cuts at Redfin will affect those agents selling across the nation.
Boston Condos and the Bottom Line
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Updated: Boston Real Estate Blog 2022
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