Online house-flipping firm Opendoor has become the latest company to downsize in the wake of the rapid shift in the housing market. CEO and co-founder Eric Wu said in an email to employees shared on the company blog Wednesday that with a "heavy heart," the company is saying "goodbye for now" to 550 employees, almost a fifth of its workforce. Under the company's iBuying model, it purchases homes listed online, makes repairs, and then puts them back on the market, usually within around 90 days. After higher mortgage rates pushed many would-be buyers out of the market this year and prices tumbled, the company ended up selling some homes for less than it paid for them, Bloomberg reports.
Zillow shut down its similar "Zillow Offers" business last year, laying off around 2,000 employees. "We’re navigating one of the most challenging real estate markets in 40 years and need to adjust our business," Wu said. He said that before Wednesday's announcement, the company scaled back its capacity by "over 830 positions—primarily by reducing third-party resourcing—and we eliminated millions of fixed expenses." Other real estate tech firms including Redfin, Compass, and mortgage lender Better.com have also laid off employees during this year's slowdown, TechCrunch reports. Bloomberg reports that Opendoor will post losses of $171 million in its third-quarter results Thursday. The company's share price fell 6.2% Wednesday and is down almost 85% so far this year. (Read more real estate stories.)