This seems to be Redfin’s pattern of cutting its workforce whenever the company hits a snag. Their last layoffs coincided with bad press and lackluster sales, suggesting that reducing staff may not be the best way to turnaround their business.
Leaders of discontinuing startups said that much of the work in place was redundant and could be done by more centralized, scaled-up operations.
The spokesperson said that the layoffs were due to the housing downturn and economic uncertainty, adding that the roles were primarily in “real estate support.” However, some employees speculate that another reason for the layoffs was a reported disagreement between upper management and certain departments over how to respond to Amazon’s entrance into the market.
Many employees at Redfin were impacted by the company’s decision to cease operations. 10 to 15 weeks of severance, depending on tenure and healthcare coverage for three months will be offered to those employees.
Redfin’s layoffs are difficult for the employees who are leaving, but the company has to continue adapting to the current economy. If a certain employee wanted to return, Redfin would be happy to have them back because the housing market is stronger than it was before their departure.
Real estate technology companies have been hit hard in recent years as mortgage rates have risen to above 6%. This has contributed to a housing downturn nationally, and these companies are likely to continue to struggle in the future.
Since Redfin’s layoff in June, those 470 employees have been seeking new jobs, and according to Glassdoor.com, the average salary for a Redfin sales associate is $61,000. The layoffs and subsequent search for new jobs has caused salaries at other tech companies to rise as well. Salaries at these companies have increased by an average of 10% since June according to data from Indeed.com. The largest percentage increase (13%) went to Amazon Web Services; the next largest increase was seen at Yelp where salaries rose by 10%. These increases may be a result of the high demand for ruby on rails developers and front-end web designers in the wake of redfin’s layoffs.
Redfin announced last November that it was laying off 13% of its staff, or 862 people, in response to the continued slowing of the housing market. Notably, Redfin also said then it was shuttering RedfinNow, its iBuying division.
Almost a year after CEO Glenn Kelman’s email to staff, the company announced it would be shutting down iBuying. Employees were given little notice and only received walk-away pay and no severance. Many employees were disappointed with the decision, as they believed that the product could have been improved even more. Despite this misstep, overall margins at the company continued to grow and in 2017 it was acquired by a larger company for $3 billion dollars.
While layoffs are somewhat common in the proptech industry, they tend to be on a smaller scale relative to other industries. Opendoor’s November layoff of 550 employees is only 18% of its workforce and Zillow’s late October cut of 300 jobs is only 8% of its total workforce. These layoffs are indicative of the ongoing pains being felt by many proptech companies and startups.
