It’s pretty big news lately; Microsoft, Amazon, and other tech companies have laid off more than 60,000 employees in the last year, according to CNBC. It’s all part of restructuring after we experienced a 12-year run-up in the market with record-low interest rates. So many big cap companies with high multiples are adjusting to higher interest rates to battle inflation and the thought of a possible recession on the horizon.
It’s hard to believe living in New Hampshire when we had the second lowest unemployment rate in the country in July 2022 at 2% that we would see the massive layoffs affecting other parts of the country. Even today, at 2.6%, New Hampshire has one of the lowest unemployment rates in the country.
BUT LOOK WHAT’S HAPPENING
- Amazon is laying off 18,000 employees
- Google 12,000 employees
- Microsoft 10,000 employees
- Salesforce 7,000 employees
- Meta (Facebook) 11,000 workers
- Snapchat 1,300 employees
- Twitter 3,700 employees
- Carvana 2,500 employees
- Peloton 1,300 workers
- Goldman Sachs 8% of workforce
- DoorDash 6% of workforce
- Vimeo 17% of workforce
- Tesla 229 workers
- DocuSign 9% of workforce
- OpenSea 20% of workforce
- Cameo 25% of workforce
- Master Class 20% of workforce
- Cassidy Digital 33% of employees
- Cisco 5% of employees
- Ford Motor Company 3,000 employees
- Robinhood 9% of workforce
- Coinbase 20% of employees
- Crypto.com 20% of workforce
- Lyft 700 employees
- DirecTV 10% of workforce
- Bed Bath & Beyond 20% of its workforce
Crunch Base News Reported more than 21,000 workers in the US-based tech companies have been laid off so far in 2023 and last year more than 107,000 jobs were slashed from the public and private tech companies to confront rising inflation rates, higher interest rates, and a tumultuous stock market.
The layoff bug that’s hammering major tech companies is also affecting the real estate industry, especially the larger publicly traded companies. Redfin, for example, saw its stock drop 93% from its all time high even though it has jumped up a bit in January. Instead of focusing on single brokerage, the company acquired a huge portfolio of homes and with the run up in interest rates and changing market conditions, the company announced the closure of its RefinNow iBuying Division, which purchased homes from sellers with the intention of flipping them for a profit. As a result, Redfin has cut close to 30% of its employees during the past year.
Online real estate company, Opendoor, is another example. The company cut 18% of its workforce due to rising interest rates affecting the market. This involved over 1,300 employees, including positions sealed back earlier this year. Opendoor is another form of iBuying where they offer cash for homes at a discount and then make repairs to the homes and hopefully resell them or a profit.
Zillow experienced similar issues back in 2021. The company took a hit and shut down its iBuying business model. Their stock dropped almost 79% from its all time high like Redfin did, however, it has bounced back up a bit in 2023 and is focusing on its core business and its super app which draws millions of monthly visitors across its digital platforms. In any case, the Seattle-based company had to react to market conditions and laid off approximately 300 workers.
Compass, another real estate brokerage, just announced its third layoffs in one year. The rapidly growing company’s CEO indicated it was planning for a significant decline in the market this year. In June, it was reported that the company laid off 450 employees in marketing and administration support and in October, it let go half of its tech division, which at the time included 1,500 workers.
Anywhere Real Estate, Inc., the parent company of real estate brokerages such as Coldwell Banker, Sotheby’s International Realty, and Century 21, announced on January 10th that it has laid off 11% of its workforce since June of 2022 due to the housing market struggling. Also, the company said it was closing its iBuying business, RealSure.
REMAX announced last year that 17% of its staff would be let go by the end of the year.
CBRE, a huge commercial real estate company, likewise announced a round of layoffs in December.
Clear Capital, a real estate appraisal technology company, laid off 27% of its workers this past fall involving 378 employees.
Finance of America Mortgage laid off hundreds of employees, First Guaranty Mortgage Corp. laid off 80% of its employees, Flagstar Bank cut its staff 20% involving 420 employees, Fly Homes cut 40% of its staff or 300 employees in addition to 20% or 200 employees previously, Homepoint laid off 500 employees, Homeward cut 25% of its staff, Homie (a discount brokerage) laid off 159 employees and at Interfirst Mortgage, nearly 500 employees were let go over the past 12 months and at Home Light 19% were let go.
America’s largest bank, JP Morgan Chase, laid off more than 1,000 mortgage employees in June, Keller Mortage (affiliated with Keller Williams Realty) laid off 150 new hires and many more at a later dated, Rocket Mortgage offered 8% of its workforce voluntary buyouts, Vacasa (vacation rental startup) cut 3% of its workforce and so many other real estate startups and mortgage companies, including Flagstar, Wells Fargo, Ameri First Mortgage, Envoy Mortgage, Finance America, Homepoint Financial, Interfirst Mortgage and Loan Depot (which will cut 4,800 jobs), plus a multitude of other mortgage and lending companies who will also be making cuts to their workforces. This of course, does not include a huge list of major retailers throughout the country that have announced store closings and major cuts throughout their industry.
So after looking at all of the above, New Hampshire looks like a very solid state with a low unemployment rate of 2.6%; however, looking ahead into 2023 as inflation begins to taper, is the Federal Reserve still on a mission and will interest rates continue to rise? What effect will it have on property values going forward? And most importantly, do we see a looming recession on the horizon?
…Only time will tell.
This article was written by Frank Roche, president of Roche Realty Group in Meredith & Laconia, NH. Frank can be reached at (603) 279-7046. Please feel free to visit www.RocheRealty.com to learn more about the Lakes Region and its real estate market.