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Here was the headline in The Street’s report on the redundancies in Compass and Redfin last week: “Real estate companies lay off employees right and left.”
Counterpoint: No, they are not.
Here were the Newsweeks: “What property redundancies tell us about the housing market.”
And here was the headline from my friends at Inman: “Should redundancies at Compass and Redfin signal a threatening property clean-up?”
Here is the reality. The companies that laid off people are either investor-driven companies that lose money and stock prices, startups with untested business models, or refi-dependent mortgage and real estate companies. They all attract a huge amount of attention from cognoscenti, but they are completely unrepresentative of the industry as a whole.
Even worse, their layoffs were based on problems with their inherent business models, but the coverage of the layoffs indicated that they were the result of changes in the housing market and economy – which triggered a misleading narrative that a falling real estate market would spur widespread. layoffs throughout the industry.
So why do I say that these companies are not representative of the larger industry? Well, let’s look at this list useful compiled by Inman that identifies 18 companies that have recently laid off people, and divides them into my three categories:
1. Money-losing public brokerages with collapsing stock prices
Two of the 18 are of course Compass and Redfin, which announced 8-10 percent layoffs last week. On the same subject : Why dealing with it will hurt your business. But none of the companies are representative of the larger brokerage community.
In fact, it has been their exact presentation to investors that has plagued them over the past decade: “We are not realtors, we are technology companies!” That camouflage worked for a long time, even while Compass lost $ 500 million and Redfin $ 110 million in 2021, the best market in housing history.
But if you live as a technology company, you also die as a technology company. With the DOW down 14 percent, the NASDAQ down over 25 percent, and investors perhaps rediscovering that profits are a little funny, the brand for the “technology company” is a little dirty right now: Compass’s share price is down over 70 percent, and Redfins’s down over 85 percent. last year. I expect a lot of pressure on them.
Be aware now that I am not trying to beat my colleagues in the brokerage business. I have worked at a brokerage house for 20 years; it’s never easy. And Compass and Redfin are both extraordinary companies run by good people who want to get them past this.
But I think it is unfair that both companies blame the layoffs on the state of the economy or the housing market. They did not lay off people because of the housing market; they laid off people because of the stock market.
2. Unproven Startups
Six of the other companies that have laid off people recently are startups with business models that have not yet proven their ability to actually make money: See the article : Willie Wilson advertises upcoming food and gas deals for $ 2 million.
Again, the narrative that their layoffs signal something about the larger industry is misleading. These companies are not representative of the vast majority of brokerages. Two of them are discount brokers who are uniquely and exquisitely sensitive to any downturn in a seller’s market because their selling price becomes much tougher when homes are not sold in three days above the suggested price.
The others are interesting companies that try to provide a useful service to consumers or industry, but they expanded aggressively during a hot market, so they are also particularly sensitive to any change in the residential environment. But it’s not the market – startups are always expanding and contracting, and they are completely unrepresentative of most real estate companies, which are more stable (and boring).
Again, I do not criticize these companies. I’ve actually worked with startups, and I know how challenging it can be to build a great company from scratch. But it’s a little funny that when the media reports that disruptive startups are expanding and hiring, the story is about how smart and disruptive their business model is; but when the media reports that they are firing people, the story is suddenly problems with the market.
3. Refi-reliant lenders and title companies
Finally, the last 10 of the 18 brokerages that have laid off people recently are mortgage and / or title companies, many of them startup: Better, Blend, Dona, Guaranteed Rate, Keller Mortgage, Loan Depot, Mr. Read also : Crash causes crypto companies to cut sports spending. Cooper, Pennymac, Rocket Mortgage, and Wells Fargo.
Again, however, mortgage and real estate companies do not lay off people because of the housing market. They lay people off because mortgage rates have risen.
All mortgage and real estate companies have benefited enormously from the sky-high refi business in recent years, but some of the companies that laid off people were particularly dependent on refis because they lacked lead pipelines for buying business from real estate agents and real estate agents. But refis has obviously died this year because anyone who was supposed to refinance probably did so in recent years.
These 10 mortgage and real estate companies are not alone. I expect that more mortgage and real estate companies will probably cut employees this year because they simply do not want the transaction burden they used to have with refunds gone. Yes, rising prices will obviously also affect real estate agents as well, but companies (such as real estate agents) that are more dependent on buying and selling activities will be in much better shape than those who have historically been dependent on refis. .
So what’s my point? I just do not think the 18 companies identified by Inman are representative of the health of the industry. And I dislike that some of these companies are trying to find excuses for layoffs by making a statement that it’s the market’s fault, rather than a problem with their business models or business plans.
Do you need to fire people? Own it. Do not bring with you the whole market.
Just to be clear, I’m not saying that these are the only companies that will lay off people this year. Other companies will follow. I’m just saying we should not read too much about layoffs in public companies that are uniquely sensitive to Wall Street sentiment, untested startups that are uniquely sensitive to fluctuations in the housing market, or mortgage and real estate companies that are uniquely sensitive to the decline in refi- the business.
Yes, the housing market cools, but in the same way that a pie that is fresh out of the oven cools – “cooling” is not the same as “cold”. We used to have five buyers for each seller. We now have two or three buyers for each seller. We still do not have enough listings, and many of these buyers simply get 7-year adjustable instead of 30-year fixed interest rates to get their mortgages. I still think there is a lot of meat on this bone.
No, we will not match the record years of 2020 and 2021. But the volume of property sold in 2022 will probably be higher than in 2019, or 2018, or 2017, or probably another year that goes back to the big one. Bang. It’s a pretty good year!
So let’s stop blaming the market for the problems we have, and go back to work.
Joe Rand is the CEO of Broker Public Portal, Chief Creative Officer for Howard Hanna | Rand Realty in New York, New Jersey and Connecticut, and the author of Disruptors, Discounters & amp; Doubts and how to become a great real estate agent.
Many organizations will first lay off employees who have been in the company for the shortest time. If this is you, there is not much you can do to help your situation. Another important factor is the job function.
How do you avoid getting laid off?
Here are 5 other ways to improve your chances of not being laid off:
- Always show your value to your business. Look for opportunities to showcase your talents and special skills. …
- Market your achievements. …
- Take advantage of “bad” times. …
- Make yourself indispensable to customers. …
- Be positive.
Are layoffs Coming 2022?
After a banner year for technology, layoffs are here. In fact, as of mid-June, more than 21,000 workers in the U.S. technology sector have been laid off in mass cuts so far in 2022, according to statistics from Crunchbase News.
Why you should never fire someone on a Friday?
Friday is a bad day to fire an employee since so many next steps are hard to take on the weekend. However, some dismissal specialists suggest that firing an employee on Friday leads to fewer incidents because the employee is out of the office.
Did Tesla lay off employees?
Elon Musk has now moved the target for the new wave of layoffs at Tesla from a 10% reduction in the workforce to 3% of employees. Earlier this month, we reported on Musk who told Tesla executives in an email that they had to cut 10% of the workforce and pause hiring because of a “super bad feeling” about the economy.
Are Tesla’s factory workers well paid? Tesla CEO Elon Musk has confirmed that Tesla’s non-unionized employees actually get paid more on an hourly basis than their unionized colleagues from General Motors. Musk’s update was shared in response to a post about GM CEO Mary Barra on Twitter.
Is it stressful working at Tesla?
At Tesla, 89 percent of employees report that they feel their work makes the world a better place, as do 92 percent of SpaceX workers. Eighty-eight percent of SpaceX employees call their job “quite” or “extremely stressful.” Tesla reports the second highest stress, with 70 percent.
Are Tesla employees treated well?
Glassdoor.com says that 58% of employees, who evaluate their job, would recommend it to a friend, and 73% said they approved the company’s CEO, who is Elon Musk. Some of the reviewers stated that they had an exceptional team to work with, and those in the leadership roles treated them well.