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By Matt Ott<\/div><\/div>\n

Subsidiary iBuyer RedfinNow is shutting down in the face of rapidly rising mortgage rates. Redfin laid off 470 people in June and will now cut 13% of its workforce.<\/span><\/span><\/p>\n<\/div>\n

WASHINGTON (AP) \u2013 Online real estate broker Redfin is cutting 862 employees and shutting down its instant-cash-offer subsidiary RedfinNow, another casualty of two-decade high interest rates stoked by the Federal Reserve\u2019s fight against inflation.<\/span><\/span><\/p>\n

The job cuts amount to 13% of Redfin\u2019s workforce, the company announced in a regulatory filing. Redfin also laid off 470 employees in June, blaming slowing home sales.<\/span><\/span><\/p>\n

Redfin has slashed more than a quarter of its workforce since April 2022 on the assumption that the housing downturn will last \u201cat least through 2023,\u201d it said in the filing.<\/span><\/span><\/p>\n

The average U.S. long-term mortgage rate is hovering around 7%, partially a result of the Fed raising rates six times this year at it tries to stem four-decade high inflation. Fed officials have boosted their benchmark lending rate by three-quarters of a point at its last four meetings, sowing fears that its heavy-handed policy could tip the U.S. into a recession.<\/span><\/span><\/p>\n

More rate hikes are expected into next year, though inflation data coming from the government Thursday could play into the Fed\u2019s strategy.<\/span><\/span><\/p>\n

Though the government recently estimated that the broader U.S. economy returned to growth last quarter, the Fed\u2019s actions have chilled a once red-hot housing market.<\/span><\/span><\/p>\n

Home sales have slowed for eight straight months as would-be first-time homebuyers pull out of the market, with borrowing costs greatly diminishing their options and inflation already taking a bite out of their incomes. Homeowners looking to upgrade are also waiting out the interest rate crest, not wanting to jump into a higher rate on their next mortgage.<\/span><\/span><\/p>\n

In its filing, Redfin said it expected to incur charges of up to $23 million for the layoffs and wind down, most of those related to benefits and severance compensation related to the layoffs.<\/span><\/span><\/p>\n

Redfin is writing down $18 million worth of inventory associated with RedfinNow, a result of homes losing their value since being purchased earlier this year. Redfin said it will continue to purchase homes under contract and renovate them and sell them quickly.<\/span><\/span><\/p>\n

The Seattle company hopes to reduce its RedfinNow inventory to about $85 million worth of homes by the end of January 2023. It currently has about $265 million worth of homes through RedfinNow, with another $92 million under contract.<\/span><\/span><\/p>\n

RedfinNow made sellers quick cash offers for their homes without having to list them.<\/span><\/span><\/p>\n

Shares of Redfin tumbled more than 8% in morning trading. They have lost about 90% of their value this year and traded close to $100 each less than two years ago.<\/span><\/span><\/p>\n

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\nAuthor: kerrys<\/p>\n","protected":false},"excerpt":{"rendered":"