Real estate firm laying off 13% of staff as housing market slows

Redfin Corp. announced this week that it’s laying off 862 people and closing its home-flipping business. The layoffs will shrink its workforce by 13 percent, CEO Glenn Kelman said in an email to staff that was posted on Redfin’s website.

“To every departing employee who put your faith in Redfin, thank you,” Kelman wrote Wednesday. “I’m sorry that we don’t have enough sales to keep paying you.”

Kelman also said that the home-flipping sector Redfin and other firms entered in recent years — known in the industry as “iBuying,” or instant buying — “is a staggering amount of money and risk for a now-uncertain benefit.”

Redfin announced in fall 2019 that it expanded its RedfinNow business to Las Vegas, saying the service would let people get an all-cash offer in a “convenient and fast way to sell a home.”

Under a typical iBuying model, firms make cash offers to people who upload information about their homes online. They close the purchase, make some upgrades to the house, and then quickly try to sell it.

“We’ve tied up hundreds of millions of dollars in houses that you yourself wouldn’t want to own right now,” Kelman wrote.

Seattle-based Redfin has offices around the country, including one in Las Vegas, and has nearly 20 agents in Southern Nevada, its website indicates.

In June, Redfin said it was slashing its workforce by around 470 employees, comprising some 6 percent of its total headcount at the time.

“We could be facing years, not months, of fewer home sales, and Redfin still plans to thrive,” Kelman wrote at the time, adding the company is “losing many good people today, but in order for the rest to want to stay, we have to increase Redfin’s value. And to increase our value, we have to make money.”

Homebuyers in the Las Vegas Valley and across the U.S. have been largely pumping the brakes for months, as a sharp jump in mortgage rates wiped out the cheap money that fueled America’s unexpected housing boom after the pandemic hit.

The average rate on a 30-year home loan was 7.08 percent as of Thursday, up from 2.98 percent a year ago, mortgage buyer Freddie Mac reported.

Freddie Mac Chief Economist Sam Khater said in a news release that the housing market is the most “interest-rate sensitive segment” of the economy.

“Home sales have declined significantly and, as we approach year-end, they are not expected to improve,” he said Thursday.

Amid the jump in borrowing costs, sales totals in Southern Nevada have plunged from year-ago levels, inventory has soared, and sellers have increasingly slashed their prices.

On the resale side, 1,724 single-family homes traded hands in October, down 44 percent from the same month last year, and 7,906 houses were on the market without offers at the end of October, up 140.5 percent year-over-year, according to trade association Las Vegas Realtors.

Across the U.S., the pace of resales fell for the eighth consecutive month in September, the National Association of Realtors reported.

Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342. Follow @eli_segall in Twitter.