Charmaine Steele had eight interviews after being let go from her position as a mortgage provider at Better.com in March. She tells Axios that each of them thereafter announced layoffs of their own. At least one has stopped operating.
Why it matters: The real estate industry is experiencing hard times. The slowdown is a cautionary sign for the economy as a whole and represents a unique weak point in the labour market during a period of high total employment.
Layoffs and closures are occurring alarmingly frequently as a result of rising interest rates that have reached 14-year highs and a significant decline in loan activity from its peaks in the previous two years.
According to Mike Fratantoni, chief economist of the Mortgage Bankers Association, the housing market frequently guides the rest of the economy into and out of recessions.
The 30-year-old Steele, who resides in Charlotte, North Carolina, claims that the job search was depressing. Nobody was being hired,
Present situation: Compass, a real estate company, disclosed the second round of layoffs on Tuesday. Opendoor, a company that buys and sells residences, had just the day before disclosed that it lost money on 42% of its deals in August.
Better.com, Steele's previous employer, has made four rounds of workforce reductions, including the infamously disastrous mass layoff via Zoom in December 2021, according to Tech Crunch.
In June, the real estate company Redfin let go 8% of its workforce.
One of the biggest non-bank mortgage lenders, Rocket, has completed two rounds of reductions. Rocket, which briefly became a meme stock in 2021 when it went for much than $25, is currently less than $8.
Reali and other small mortgage-related fintech companies shut down. A mortgage company named Sprout also closed its doors. Company First Guaranty Mortgage
According to Tech Crunch, Better.com, Steele's former employer, has conducted four rounds of workforce reductions, including the infamously bungled mass layoff via Zoom in December 2021.
Redfin, a real estate company, let go 8% of its workforce in June.
- Two rounds of layoffs have been made by Rocket, one of the biggest non-bank mortgage lenders. When it traded for over $25 in 2021, Rocket briefly became a meme stock. Today, it is worth less than $8.
- Reali, a small fintech company in the mortgage industry, shut down. A mortgage company named Sprout also went out of business. Initial Guarantee Mortgage Corp.
After working as a real estate agent, Steele says she was making about six figures at Better.com, her first position at a lender. She now makes 50% less money working in the small business loan sector.
The bottom line:
- This is different for folks who are experiencing flashbacks to the financial crisis. Small non-bank lenders currently control two-thirds of the mortgage market; according to Fratantoni, this sector is home to 4,500 businesses.
- Banks are substantially less exposed to the housing market overall, notwithstanding recent cuts to their mortgage businesses.
- And the kind of systemic spillover we experienced over two decades ago is much less likely. The majority of borrowers have mortgages with rates under 5% thanks to improved underwriting standards, which also means they have stronger credit (foreclosure rates are still low).
- Editor's note: This item has been updated to reflect that the Redfin layoffs took place in June rather than August.
