Even as the housing market transitions into the more active spring market, firms within the real estate industry are still struggling to overcome the challenges that emerged nearly a year ago when the Federal Reserve began raising interest rates. Opendoor is one company that has faced serious headwinds thanks to the rapid housing market cool down.
On Tuesday, the iBuyer announced that it had made the “very difficult decision” to layoff roughly 22% of its workforce, or 560 positions.
According to a company spokesperson, most impacted employees had been in operations roles.
“We’ve been weathering a sharp transition in the housing market – the steepest and fastest rate increase by the Fed in 40 years, the more than doubling of mortgage rates from historic lows, and the hit to home affordability have driven an approximately 30% decline in new listings from peak levels last year. We’re taking these actions now to better align our operational costs with the anticipated near-term market opportunity, while maintaining our critical technology investments that will continue to drive the business long term. While this was a hard decision, it was necessary to ensure that we can continue to deliver on our mission and serve our customers for years to come,” an Opendoor spokesperson wrote in an email.
Workers facing cuts will receive severance, extended healthcare benefits and job transition support, according to the iBuyer.
This is the second round of substantial cuts the firm has undergone in the past six months. In November, Opendoor announced that it had cut 550 jobs, or roughly 18% of its workforce at the time.
Thanks to the rapid housing market shift, Opendoor struggled in 2022, recording a net loss of $1.4 billion.
“Navigating a major housing cycle has not been easy,” Carrie Wheeler, the CEO of Opendoor, told investors during the firm’s fourth-quarter 2022 earnings call in late February. “As for right now, we are highly focused on stabilizing our core business and ultimately returning to positive free cash flow.”