By TYRONE TOWNSEND
In the upcoming months, mortgage lenders, refinancing businesses, and real estate agencies may fire thousands of people as the housing market cools.
Many millennials had started looking for new houses because of low-interest rates, stimulus payments, and the ability to work from home during the coronavirus epidemic, which fueled a booming U.S. housing market.
But now the pandemic is no longer driving workers out of metro markets. Peak prices hit in June and potential buyers are pulling out of the market.
According to experts, mortgage origination is expected to fall 35 to 50 percent this year.
The drop in refinancing is also playing a key role in changes to the mortgage industry.
The Mortgage Bankers Association attributes the dip to a decrease in refinancing, which is predicted to be from $2.3 trillion to $730 billion. According to the organization, mortgage refinancing applications are down nearly 80 percent from a year ago.
Redfin said that it is laying off around 8% of its personnel in response to the severe financial impact of the U.S. housing slowdown on the business.
Redfin released a report indicating that homebuyer budgets had leveled. In the three months ended April 30, the national economy grew by only 0.3 percent year on year, the worst rate since June 2020.
“We’ve already built tools for teams to work together on a transaction, so we need fewer engineers to add to those tools,” Redfin CEO Glenn Kelman said, adding that they’ll also spend less on analytics and user research.
Groups that deal with recruiting, training, and licensing will also be “hardest hit,” he said.
The company said the workforce reduction would lead to a pre-tax cash charge for one-time termination benefits, which consist of severance and related costs, between approximately $9.5 million and $10.5 million in the second quarter of 2022.
“We’re losing many good people today, but for the rest to want to stay, we have to increase Redfin’s value,” Kelman said. “And to increase our value, we have to make money.”
They’re not alone.
As a result of a 33 percent decline in first-quarter income to less than $1.5 billion from over $2.2 billion in the same period last year, Wells Fargo laid off at least 114 people in its mortgage lending division this year.
JPMorgan announced the latest layoffs in its home lending division, impacting more than 1,000 workers.
According to the bank, some employees will be let go, while others will be transferred to new teams.
Real estate lender Kiavi laid off 7 percent of its work staff.
Kiavi announced the layoffs just a few weeks after closing a $218 million revolving securitization of unrated residential transition loans (RTLs).
Kiavi issued a statement concerning the recent reduction.
“At Kiavi, we are focused on delivering outstanding products and services to our customers,” the statement began. “Given market conditions, we have carefully evaluated our operation and determined that a headcount reduction was needed.”
The statement continued, “Our top priority is to approach this process with empathy, fairness, and transparency, ensuring that we treat our team with utmost respect and dignity. We offer severance and outplacement services to make this transition as smooth as possible.”
While some in the housing market are being let go, other sections of the market are hiring.
Home builders are in need of employees. And they pay well.
“There’s still a huge number of homes and apartments and remodeling projects that are in the construction pipeline, and you need workers to finish those projects,” Robert Dietz, chief economist at the National Association of Home Builders, said.
According to the Bureau of Labor Statistics, there are now 450,000 opportunities in home building and restoration firms.
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