It seems the iBuying giant Opendoor is trimming its sails as it navigates through the choppy waters of today’s housing market. On Tuesday, the company announced a layoff of 22% of its workforce – that’s 560 positions cut, primarily in operations roles.
We all know that every business has to adapt and change, but the timing of these layoffs reveals some insights into the challenges that iBuyers are currently facing.
The Reason Behind Opendoor Layoffs
So, what’s causing this “sharp transition” in the housing market? An email statement from an Opendoor spokesperson cites last year’s historic rise in mortgage rates, which resulted in a “30% decline in new listings from peak levels.”
As the market slows down, the company is making some tough calls “to better align (its) operational costs with the anticipated near-term market opportunity while maintaining critical technology investments that will continue to drive the business long term.”
With around 2,000 workers remaining after the cuts, Opendoor is looking for ways to ride out this storm. The employees affected by the layoffs will receive severance, extended healthcare benefits, and job transition support – a silver lining for those facing the chop.
A Volatile Market Brings Industry Changes
It’s important to remember that Opendoor isn’t the only company feeling the pinch. The housing industry as a whole has been taking a beating, with thousands of workers in mortgage companies, brokerages, tech firms, and other real estate sectors losing their jobs. Big-name players like Zillow, Compass, and Keller Williams have all had to make similar cuts over the last year.
But, as the saying goes, “Necessity is the mother of invention.” And Opendoor is no exception. The company is pivoting towards a new marketplace called “Exclusives,” which aims to connect buyers and sellers, with Opendoor collecting a fee for acting as the middleman. This asset-light approach could prove to be a more nimble way for the company to adapt to changing market conditions without shelling out big bucks on buying and renovating properties.
Even former rivals can become allies in these challenging times – Opendoor has struck up a partnership with Zillow to boost its chances of success.
Although Opendoor CEO Carrie Wheeler didn’t comment on the layoffs, she has been bullish about the company’s future prospects. In a recent earnings report, she emphasized the importance of “operating with excellence and leaning into our core strengths.” Wheeler added, “We’re energized about our future.”
So, while the iBuying industry faces headwinds, it’s clear that Opendoor isn’t throwing in the towel just yet. The company is adapting and innovating to weather the storm and emerge stronger on the other side. I’ve heard it said that “Change is inevitable, but growth is optional.” And it seems Opendoor is choosing growth.
