Redfin’s CEO told The AP that the business model was too risky and expensive and he wanted to shut down RedfinNow before the market corrected.
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Glenn Kelman says Redfin’s shuttered iBuying venture lasted longer than it should have.
Redfin’s CEO Associated Press In a new interview, he said he wanted to close RedfinNow sooner than during the ongoing market correction, saying the business model was too risky and expensive.
“Perhaps the iBuying business should have closed sooner,” says Kelman. “The housing market adjustment should not have been made to understand how capital intensive and risky it is.”
Redfin closed RedfinNow in early November, announcing headcount reductions, cutting 13% of its overall workforce.Kerman said APs He has 30% fewer employees than he did a year ago before he launched multiple layoffs.
The layoffs came as a result of the dramatic market correction currently occurring in the US housing market. After a frenzy in 2021 and 2022, the market now sees a lack of demand due to high mortgage rates, which currently sit at 6.33% for 30-year mortgages. According to Freddie Mac.
Kelman said Redfin feels it has made enough changes to its business to weather the recession, including cutting jobs, closing its lending business and buying more profitable lenders, but it will continue to make more profitable lenders. He did not rule out moves to cut costs.
“I think we have made enough changes. He said, “I hope I’ve made the necessary changes to adapt to this environment. I think I’ve been in this seat for 18 years now. I’ve seen it all.” [The financial crisis in] 2008 was the worst, but I feel like I’m ready for 2023.
But Kelman said he is confident 2023 won’t be as bad as 2008, when 30% of homes were submerged and prices plummeted.
“It’s very unlikely that the price drop that people fear will be catastrophic will happen,” he said. “Well, prices are going down. But in 2008, 30% of homes were underwater. number will be 2.2%.
“Therefore, nothing will force price discovery among individual homeowners, which usually leads to faster and indeed healthier corrections.”
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