Compass To Cut About 10% Of Workforce Amid U.S. Housing Slowdown
Real estate brokerage Compass Inc. plans to cut about 10% of its workforce as rising interest rates have begun to cool.
(Bloomberg) -- Real estate brokerage Compass Inc. plans to cut about 10% of its workforce as rising interest rates have begun to cool a US housing market that reached a frenzy during the pandemic.
The layoffs account for about 450 employees and will contribute to an estimated $21.5 million to $23 million in costs before taxes in the second quarter, the company said in a filing Tuesday. Bloomberg News reported the layoffs earlier.
Compass’s personnel cutbacks are part of a broader retrenchment by the real estate brokerage, which includes a planned pause in geographic expansion and merger-and-acquisition activity. The company is also expecting to consolidate some offices as a way to cut costs.
“The strategic actions are part of a broader plan by the company to take meaningful actions to improve the alignment between the company’s organizational structure and its long-term business strategy,” Compass said in the filing.
A Compass spokesperson confirmed the layoffs in an email and declined to comment further. Compass stock, which was previously halted for the announcement, was down 2.9% to $4.62 at 12:27 p.m. in New York trading.
The staff reduction comes as the Federal Reserve’s efforts to tamp down inflation push mortgage rates higher, cooling demand in the housing market. Compass, whose main source of revenue comes as a split from real estate agent commissions, is likely to see lower volumes as a result. The company’s real estate agents are independent contractors and aren’t included in the layoffs.
Compass was co-founded in 2012 by Robert Reffkin, a former Goldman Sachs Group Inc. banker who sought to build a tech-enabled real estate brokerage. The company grew rapidly, often acquiring existing brokerages as a means of expanding, and completed an initial public offering in 2021.
Compass’s reduction of staff follows similar moves from other companies, including Coinbase Global Inc.
(Updates with details on transformation plan starting in second paragraph.)
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