Real estate firms lay off hundreds as home sales tumble
“We could be facing years, not months, of fewer home sales,” the CEO of Redfin said.
Updated June 16, 2022 - 6:45 pm
Two national real estate brokerages announced layoffs this week as home sales tumble amid rising mortgage rates, with one firm warning purchases could be down for years.
Home-listing firm Redfin Corp., which has offices around the country, including in Las Vegas, said in a Securities and Exchange Commission filing that it is slashing its workforce by around 470 employees, comprising some 6 percent of its total headcount.
In an email to staffers Tuesday that was posted on Redfin’s website, CEO Glenn Kelman said the company had raised “hundreds of millions of dollars so we wouldn’t have to shed people after just a few months of uncertainty. But mortgage rates increased faster than at any point in history.”
“We could be facing years, not months, of fewer home sales, and Redfin still plans to thrive,” he wrote, 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.”
Meanwhile, residential real estate brokerage Compass Inc. said in an SEC filing Tuesday that it is eliminating around 450 positions, or roughly 10 percent of its workforce.
Compass also has locations around the U.S. It does not have any in the Las Vegas Valley, though it has one in Incline Village, on the Nevada side of Lake Tahoe.
It said in a statement to the Review-Journal on Wednesday that because of 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 its workforce.
‘Shrink the buyer pool’
Following the most heated year for housing in a while — in which cheap borrowing costs fueled a buying boom of rapid sales and record prices in 2021 — sales totals locally and nationally have dropped lately as once-rock-bottom mortgage rates push higher.
At the same time, sales prices are still notching huge year-over-year gains in Southern Nevada and other metro areas.
The higher prices and increased mortgage rates have made buying a home all the more expensive, while people also face increased costs for gas and other goods amid the highest inflation in decades.
The Federal Reserve has been raising interest rates lately to try to curb inflation. In the housing market, the average rate on a 30-year home loan was 5.23 percent last week, up from 5.09 percent the week before and 2.96 percent a year ago, mortgage-finance giant Freddie Mac reported.
America’s central bank approved another rate hike Wednesday — its largest in nearly three decades.
Overall, the monthly payment on a $300,000 mortgage has climbed from $1,265 in December to $1,800 today, National Association of Realtors chief economist Lawrence Yun said in a statement Wednesday.
“That’s painful and, consequently, will shrink the buyer pool,” he said.
Prices up, sales down
In Southern Nevada, the median sales price of previously owned single-family homes — the bulk of the market — was a record-high $482,000 in May, up 25.2 percent, or $97,000, from a year earlier, according to trade association Las Vegas Realtors.
Amid the typically busy spring buying season, 2,907 houses traded hands in May, down 8.8 percent from May 2021, the association reported.
Meanwhile, the tally of available homes shot higher, as 3,570 single-family homes were on the market without offers at the end of May, up 75.8 percent from a year earlier, according to the association.
“The slowdown in sales and increase in our housing supply are signs that things may be starting to calm down a bit,” LVR President Brandon Roberts said in a news release earlier this month. “Even though prices are still going up, it’s welcome news for potential buyers to see more homes on the market.”
Contact Eli Segall at email@example.com or 702-383-0342. Follow @eli_segall on Twitter. The Associated Press contributed to this report.