- Redfin said it expects home sales to continue to decline through 2023 after laying off 13% of its workforce.
- The U.S. housing company is now “in the jungle” as buyer demand is sluggish, said the company’s CEO.
- Rising mortgage rates and high inflation are the main pressures pulling down home sales numbers.
redfin Home sales are expected to continue to decline through 2023, leaving housing companies to continue negotiating the uncertainty ‘jungle’ for longer than previously expected.
real-estate company Laid off 862 employeesor 13% of its workforce, Wednesday against the backdrop of a deteriorating US housing market.
The decline was triggered by higher inflation and higher interest rates, which pushed up borrowing costs. This has put pressure on homebuyer demand and home prices, both of which have taken a hit this year.
The company’s CEO, Glenn Kelman, told employees that the layoffs envision a recession in the housing market that will last at least until 2023. decision notice.
This means that “housing companies are in the jungle now, but Redfin has been around and is stronger.” another press release.
“House prices will eventually stabilize, but the cost of capital won’t return to 2021 levels anytime soon,” Kelman added.
Kellman said on the company’s earnings call that 2023 home transaction volume is expected to be about 30% lower than in 2021, when mortgage rates hit record lows and strong demand sent home prices soaring. said it does.
This means that the number of existing home sales will fall from about 6.1 million in 2021 to about 4.3 million next year. This year’s trading volume was on pace to reach 4.7 million units as of September, according to the company. National Real Estate Association.
Interest rate hikes by the US Federal Reserve have pushed the average 30-year mortgage rate up to about 7%. freddie macThat’s why the monthly payments for Americans to buy a home are much higher.
according to Fannie Mae Surveyjust 16% of Americans believe now is a good time to buy a home, suggesting homebuyer confidence is waning.
Surprisingly, Redfin has also announced that it will close its home flipping business, RedfinNow. RedfinNow is expected to lose up to $26 million this year, excluding overhead costs.
The sudden slowdown in the housing market left Redfin with hundreds of millions of dollars in “homes you yourself don’t want to own right now,” Kellman said in a memo.
Redfin was already feeling the pain of the downturn in the housing market in June, when homebuyer demand fell 17% year-over-year. 470+ employees In response to the.
“The June layoffs are in line with our expectation that there will be fewer homes for sale in 2022. The layoffs assume that the recession will last at least until 2023,” Kelman wrote. said in
Against that background, Redfin Posted A quarterly loss of $90.2 million, compared to a net loss of $18.9 million in the third quarter of 2021. The company’s shares are
Redfin shares were trading at $4.58 a share at Thursday’s last check, up about 40% from Wednesday’s close.