Slowing housing market conditions are catching up with Opendoor. The iBuyer announced on Wednesday that it is laying off 550 employees, or about 18% of the company.
The company’s founder and CEO, Eric Wu, wrote in a blog post that the workforce cuts were due to “navigating one of the most challenging real estate markets in 40 years” and that they “need to adjust [their] business” in response.
Wu also noted that the firm had previously scaled back its capacity by over 830 positions, “primarily by reducing third party resourcing.” In addition, Wu wrote that Opendoor had already eliminated “millions of fixed expenses.”
“To manage through the turbulence in the market, we’ve worked quickly over the last two quarters to reduce our operating expense,” Wu wrote.
Employees were informed of their status at the company via email. Impacted workers will receive 10 weeks of severance pay plus an additional two weeks pay for every full year beyond two years of tenure. They will also receive health care benefits through the rest of the month and for three additional months along with job transition support.
This announcement came just one day before Opendoor is set to announce its third quarter 2022 earnings. That announcement is slated to happen on Thursday.
According to data from YipitData, Opendoor lost money on 42% of its transactions in August, as the firm’s buy-to-sale premium, also known as the difference between the price it buys properties at and the price it sells them for, dipped below 0%. Earlier in the year it hit a peak of 12%.