In what is likely the first of many more of these sorts of announcements in the real estate space, Redfin is laying off 20% of their employees.
In a post on its company blog yesterday, Redfin CEO Glenn Kelman explained that the layoffs were due to the company being hit by market conditions that “wiped out prospective down-payments, tours and offers [that] dropped 30%”.
It surely must have been a tough decision, but kudos to Kelman for taking immediate and decisive steps to react to the change in the market — and for being so openly transparent about the process.
Because of the transactional nature of its business, Redfin is most certainly feeling the pain of this market much sooner than some of its contemporaries – but I suspect this is only the tip of the iceberg, as more Real Estate 2.0 startups start to feel the pinch of the slowing economy.
Case in point, in a story on Inman News today, research firm Borrell Associates is “forecasting that annual growth in real estate-related online advertising will slow to 11.3 percent in 2008 and 5.1 percent next year.” For sites pinning their hopes on advertising revenue, it looks like that might be drying up as well.