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Opendoor lays off 550 employees in a “difficult” real estate market

By on November 2, 2022 0

On line opendoor real estate company cuts about 18% of its workforce as rising interest rates plunge The US real estate market in turmoil.

Opendoor CEO and co-founder Eric Wu announced the layoffs in a Wednesday blog post, noting that around 550 employees would be affected. The company had already cut more than 830 positions earlier this year, mostly through third-party resource cuts, and eliminated “millions of fixed expenses,” according to Wu.

“The reality is that we’ve been navigating one of the toughest real estate markets in 40 years and we need to adjust our business,” the CEO said in the company blog.

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The San Francisco-based tech company was seen as a changing force in the US residential real estate market, paving the way for a new breed of home hunters called iBuyers, or instant buyers.

The company uses an algorithm to set the price of the houses, offers to buy the properties in cash, carry out the necessary repairs then resells the houses.

But rising interest rates have cooled the once-hot housing market. Current mortgage rates eclipsed 7% for the first time in more than two decades, dampening demand. Pending home sales plunged for the fourth consecutive month in September, down 10.2% compared to the preceding month.

The Federal Reserve on Wednesday raised its short-term benchmark rate by three-quarters of a percentage point to a range of 3.75% to 4%, a move that is expected to continue pushing up rates on credit cards, home equity lines of credit and other loans.

Zillow, another online real estate company, also laid off workers. The company has confirmed that it laid off about 300 employees last month.

Opendoor share price

Opendoor’s stock price fell 6.15% on Wednesday, closing at $2.29.

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