Opendoor Cuts 22% of Staff

UPDATED April 26, 11:30 a.m.: Opendoor, one of the top iBuyers left in the field, is making another significant cut to its staff.

The San Francisco-based company laid off 560 employees, or 22 percent of its workforce on Tuesday, Inman reported. The company told the outlet the cuts were mostly focused on operations roles.

There are believed to be fewer than 2,000 employees left at the company after months of losses.

“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 percent decline in new listings from peak levels last year,” a company spokesperson said in a statement.

The layoffs are the second since November, when Opendoor slashed 18 percent of its staff. That round of cuts affected 550 positions and came after the company also scaled back by reducing third-party resourcing.

The company reported a $1.4 billion net loss for 2022, doubled from the previous year, and a net loss of $399 million in the fourth quarter. While the loss wasn’t as significant as the previous quarter, revenue in the fourth quarter dropped 25 percent year-over-year.

After a net loss of $928 million in the third quarter, CEO Eric Wu departed from his post, replaced by Carrie Wheeler. She has since tried to sound a positive note about the company, saying during a February investor call that the company was “energized” about the future.

The world of residential real estate clicked into cost-cutting mode in the past year, as rising interest rates and rising mortgage rates sidelined many buyers, slowing activity that soared at the onset of the pandemic.

The iBuying business has taken its share of hits in recent years. In 2021, Zillow exited the field and cut 25 percent of its staff in the process, creating an opportunity for Opendoor and Offerpad to gain more market share in the industry.

Opendoor sold roughly 7,500 homes in the fourth quarter, a 23 percent decline year-over-year. It also took an average loss of $28,000 for each home sale, compared to a $16,000 gain for each sale a year earlier.

— Holden Walter-Warner