With mortgage rates rising, Redfin and Compass — two real estate companies — announced on Tuesday that they were laying off staff, according to USA TODAY.
According to a blog post by Redfin CEO Glenn Kelman, 6% of the company’s staff were laid off after May fell 17% below expectations. That’s about 470 employees, USA TODAY wrote.
“A layoff is always a terrible shock,” Kelman wrote. “But mortgage rates have risen faster than at any time in history. We could be facing years, not months, of fewer home sales, and Redfin still expects to thrive. If going from $97 per share to $8 doesn’t strain a company, I don’t know what does.
In Massachusetts, house prices are also rising. In May, a single-family home in Greater Boston rose 15.1% from a year earlier and continues to climb, according to the Boston Globe.
All employees who have been terminated by Redfin will receive two to four months of severance pay and will be covered by company health care for three months.
“We are losing a lot of good people today, but in order for others to want to stay, we need to increase the value of Redfin. And to increase our value, we need to make money. We owe it to everyone who invested your time or your treasure in this business to become profitable, and then very profitable,” Kelman wrote.
Compass is laying off 10% of its staff, or 450 people, according to the Wall Street Journal.
“Due to the clear signals of slowing economic growth, we have taken a number of steps to protect our business and reduce costs, including suspending expansion efforts and making the difficult decision to downsize our team. of employees by about 10%,” Compass said. the spokesperson told CNBC.