Opendoor lays off 550 workers
Ahead of their third-quarter earnings release, founder and CEO Eric Wu announced companywide layoffs that will cut the workforce by 18%.
Key points:
- Wu said that the company is trying to adjust to “one of the most challenging” real estate markets since the 1980s.
- Opendoor joins several other major real estate companies to lay off workers amid higher costs for mortgages due to rising interest rates.
- Laid-off workers will receive a severance package that includes wages based on tenure and limited health insurance benefits.
Saying that Opendoor is "navigating one of the most challenging markets in 40 years," CEO and co-founder Eric Wu announced layoffs Wednesday afternoon that impacted 550 workers across the real estate tech company. Opendoor is best known for its tech-driven iBuyer program.
Wu said in a companywide email that the terminations will reduce Opendoor's workforce by 18%. "We did not make the decision to downsize the team today lightly but did so to ensure we can accomplish our mission for years to come," Wu wrote.
Opendoor, which is based in San Francisco but operates nationwide, is the latest real estate company to scale back staff as the housing market cools amid higher interest rates and inflation. Other major real estate companies to reduce personnel include Anywhere, Compass, Keller Williams and Zillow.
"While we may be navigating a once-in-forty-year market transition, it doesn't take away the difficulty, frustration, and sadness downsizing brings," Wu wrote in his email, which he signed: "With a heavy heart, Eric."
Opendoor, which launched in 2013, is offering laid-off workers a minimum of 10 weeks' severance pay that is based on tenure as well as limited health care benefits and job transition counseling.
Wu discussed in his email the aggressive cost-cutting measures that have been underway at Opendoor for the past two quarters before the company made the decision to lay off workers.
"Prior to today, we scaled back our capacity by over 830 positions — primarily by reducing third-party resourcing — and we eliminated millions of fixed expenses," Wu said.
Opendoor announced the job reductions the same day that the Fed raised interest rates for a sixth time this year, and a day ahead of the company's quarterly earnings report. Higher interest rates are impacting homebuying costs and pricing some buyers out of the market.