Real Estate Companies are Actually NOT Laying off Staff Right and Left

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Recent headlines have been filled with news of layoffs, but look closer. The companies where layoffs are occurring are wholly unrepresentative of the real estate industry and don't represent a major trend.

Inman performed an analysis on the industry and published it today. Here's a summary of their findings and our view at My State MLS.

June 23, 2022

By Joseph Rand, Inman

Here was the headline in The Street's report on the Compass and Redfin layoffs last week: "Real Estate Companies are Laying Off Staff Right and Left."

Counterpoint: No, they're not.

Here was Newsweek's: "What Real Estate Layoffs Tell Us About the Housing Market."

Answer: Nothing.

And here was the headline from my friends at Inman: "Do Layoffs at Compass and Redfin Signal a Looming Real Estate Purge?"

Answer: No.

Here's the reality. The companies that laid people off are either investor-driven companies that are losing money and share price, startups with unproven business models, or refi-dependent mortgage and title companies. They all attract a vast amount of attention from the cognoscenti, but they are wholly unrepresentative of the industry as a whole.

Even worse, their layoffs were based on problems with their intrinsic business models, but coverage of the layoffs suggested that they were the result of changes in the housing market and economy - sparking a misleading narrative that a declining real estate market is going to spur widespread layoffs throughout the industry.

So why do I say those companies are not representative of the larger industry? Well, let's look at this list helpfully compiled by Inman identifying 18 companies that recently laid off people, and break them down into my three categories:

1. Money-losing public brokerages with collapsing stock prices

2. Unproven Startups

3. Refi-reliant lenders and title companies

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Our View at My State MLS

"The companies laying off seem to the ones that got venture capital money and spent like crazy to gain market share without a focus on being profitable," said Dawn Pfaff, President of My State MLS. "The companies that have bootstrapped and have a solid business plan are following that plan, and they aren't laying people off.

In general - real estate companies don't have a lot of employees as the agents are indy contractors. The larger firms have marketing departments, managers and admins, and we aren't seeing huge layoffs there yet."

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