Austin-based real estate startup Homeward is laying off dozens of employees following market changes and reduced demand for condos, according to the company’s CEO.
Founded in 2018, Homeward operates a digital platform that helps users buy and sell their homes. CEO and founder Tim Heyl also founded Austin-based real estate brokerage Heyl Group.
Following a national slump in real estate demand, Homeward will lay off about 20% of its workforce, Heyl said in a blog post.
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Homeward did not respond to requests for comment or say how many employees it currently has. Built in Austin, an Austin-focused tech industry information site, estimates the company has 400 total employees, including 150 in Austin.
In a blog post, Heyl said affected employees will receive seniority-based severance pay as well as health benefits through the end of August, relocation services with their recruiting team, unrestricted stock options and no non-compete clauses.
“Despite a strong financial start to the year, we are currently staffed for more growth than we currently anticipate,” Heyl said. “These cuts … are necessary for our future success, but it doesn’t make it any easier to say goodbye to so many of our colleagues. Layoffs have real consequences for people, and this is not a decision we take lightly.”
“The continued acceleration and severity of market changes forced us to consider deeper changes in our business. It has become clear that these headwinds are part of the broader challenges facing our economy. We don’t know how long real estate will continue to weaken, so we have to plan for a less active market.”
Homeward was created to help buyers afford a new home before selling their existing home. The startup provides an all-cash offer loan for new homes, then buys their home from Homeward once their mortgage is ready. The company also allows people to buy a new home before they list and sell their existing home, and if the home doesn’t sell within six months, Homeward will buy it at a pre-agreed price.
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Real estate startups have boomed in recent years, including in Austin, where at least 30 tech companies are focused on the real estate market, according to the Austin Chamber of Commerce.
But Heyl said the industry had taken a hit recently.
“The market has changed dramatically in recent months: high inflation has persisted, interest rates are rising dramatically, and home sales have fallen from historically high levels. Coupled with affordability issues, fewer buyers are looking for homes. There is also less demand for cash-offer products that differentiate buyers in the home buying process,” he said.
Homeward operates in more than 20 markets, including Austin, Houston and Dallas. The company recently expanded into Oregon and Washington.
The layoffs follow a period of rapid growth for Homeward, which said it has hired more than 250 people in 2021 alone.
Homeward raised $371 million in funding last year, which it said it will use to develop its business, meet demand and expand into new markets. In 2020, Homeward raised US$105 million.