Zillow Group continues to cut staff as part of the company’s decision to end its home buying business.
The Seattle real estate giant said in November that it would lay off about 2,000 people, or 25% of the company, as a result of the Zillow Offers shutdown.
The layoffs are taking place over several quarters. A subset of the cuts were made this week, a spokesperson confirmed. Laid off workers get at least 10 weeks of pay, six months of benefit costs, the value of the their next stock vesting paid directly to them, and outplacement services.
Zillow reports its Q4 2021 financial data next month on Feb. 10. The report should provide more details about the state of Zillow’s business as transitions away from Zillow Offers, which made up more than 60% of the company’s revenue in the third quarter.
Zillow originally projected annual revenue of $20 billion by 2024 from the “iBuying” home-flipping program, which launched in 2018 and was billed as a way for consumers to avoid the hassle, time commitment and uncertainty of a traditional sale.
But unpredictability in forecasting home prices proved too tough a task for the company’s algorithm and Zillow wasn’t prepared for “earnings and balance-sheet volatility,” according to CEO Rich Barton in November.
Zillow is in the process of selling more than 10,000 homes, including some to landlords backed by large institutions, which has raised questions about the iBuying industry given the lack of affordable housing.
Zillow will take a write-down of more than $500 million related to the shutdown of Zillow Offers.
Zillow’s stock skyrocketed for much of 2020 but is now trading at pre-pandemic levels. Shares have fallen about 25% this year, and more than 60% over the past 12 months.
When Zillow reports financials next month, analysts will be keeping a close eye on the company’s traditional Premier Agent business of selling advertising to real estate agents.
“Post iBuying, we find ZG at a moment when it needs to demonstrate core business stability and growth before investors can feel safe owning it,” RBC Capital Markets analyst Brad Erickson wrote in a report earlier this month.
The Wall Street Journal reported this week that “Zillow’s near-term fate hinges upon a delicate market balance the likes of which we’ve never quite seen.” The housing market is seeing low inventory, high demand, and a record number of real estate agents.