Redfin’s losses swell to $78M in Q2
Brokerage faces double whammy with mortgage rate jump, lower inventory
Redfin is among the brokerages feeling the burn in recent months as mortgage rates increased, inventory shrunk and prices increased to push homebuyers out of the market.
“The housing market took a turn for the worse in the second quarter,” said Redfin CEO Glenn Kelman in an earnings call with investors Thursday, citing the diminished conditions for the company’s poor second quarter performance.
“Even as the housing market weakened our results, Redfin has gotten stronger,” Kelman said, pointing to things like expanding the platform to include 91 percent of the homes in America to 94 percent, with 52 new MLSs.
The company reported a net loss of $78.1 million, compared to a net loss of $27.9 million in the second quarter of 2021. Second quarter revenue was $606.9 million, an increase of 29 percent compared to the second quarter of 2021 and up from $597 in the first quarter.
Gross profit was $118.0 million, a decrease of 6 percent year-over-year.
“That won’t be enough to sink our battleship,” Kelman said. “Our forecast assumes home prices keep declining moderately through the rest of 2022. But we still expect our properties division to earn a significant gross profit for the full year.”
Kelman said there was more to blame the balance sheet on than just the homebuyer’s economy.
In the second quarter, Redfin closed on a deal to acquire Bay Equity Home Loans, a national, full-service mortgage lender. The purchase price was estimated to be $135 million in cash and stock.
The quarter’s results are a far cry from the Redfin’s ride atop the hot housing market. Alongside announcing a 14 percent boost to revenue in 2020, the brokerage said in February 2021 it was racing to expand its agent count, hiring “faster than ever.”
That hot streak appeared to have cooled into reversal by this summer. Redfin in June announced it was laying off around 470 employees, or approximately 8 percent of its total employees.
Kelman called the layoffs a “setback,” but said there would be no changes to how agents — who are salaried — will be paid.