The coronavirus outbreak has businesses worldwide feeling the burn. Retailers have been all but shuttered, restaurants have been reduced to delivery and curbside orders only, and all "nonessential" companies have seen productivity grind to a halt thanks to remote-work transition slowdowns.
And real estate's no different.
In the last month, countless real estate firms have announced layoffs, cutbacks, and even the closure of entire offices and lines of business. Opendoor and Zillow (NASDAQ: Z) (NASDAQ: ZG) stopped buying houses. Lenders stopped issuing non-qualifying mortgage (non-QM) loans. Zillow even pulled back on contracts already in progress.
Here's a quick synopsis of some of the biggest moves as of late:
Real estate brokerage Compass announced the layoffs of about 15% of its total workforce last week. The move impacted around 375 employees and came despite CEO Robert Reffkin reducing his own salary to $0. The rest of the company's executive team also agreed to 25% reductions in pay.
Vacasa, a short-term rental management platform, announced recently it would begin laying off workers across all levels, both in its Portland offices and in those in Boise, Idaho. Its interim CEO, Matt Roberts, has agreed to take no pay for the remainder of the year, and the rest of the leadership team will see a 50% decrease in salary. The company will also be moving many full-time employees to part-time status, cutting their hours -- and pay -- in half.
Knotel, which offers flexible office space rentals, slashed its workforce in half just a few days ago, laying off 127 employees worldwide and furloughing another 68. When announcing the move, CEO Amol Sarva said, "Business as usual is over."
Realogy (NYSE: RLGY), which owns brands like Century 21, Coldwell Banker, ERA, and Sotheby's International Realty, hasn't made layoffs just yet, but they did announce company-wide workweek reductions for most of their employees. CEO Ryan Schneider has also agreed to a 90% cutback in salary.
Boutique short-term rental service The Guild reduced its workforce by more than 20% last week. The Austin-based firm laid off just under 40 employees.
Zeus, which offers furnished apartments for business travelers in six cities across the U.S., laid off 80 employees this week, reducing its workforce by about 30%.
Office and event space company Convene cut about 150 employees recently, amounting to about a 20% reduction in staff. Additional workers are going to be furloughed, though the exact number has yet to be determined.
Sonder, which offers short-term rentals with a hotel-like feel, laid off 22% of its staff and furloughed an additional 11% in light of declining reservations. The company has said it hopes to rehire the furloughed employees if things pick back up.
Short-term rental service Lyric -- which helps multifamily property owners market their units to business travelers -- reduced its workforce by 20% earlier this month. About 25 people were laid off in the move. The remaining employees were told that their jobs cannot be guaranteed if economic conditions fail to improve over the next two months.
Various Mortgage Lenders
Mortgage lenders have also been cutting back as of late. Angel Oak Mortgage Solutions laid off about 200 employees last week (a 70% share of its workforce), and Freedom Mortgage shuttered an entire office earlier this month.
A possible theme?
Though a handful of brokerages and other companies have had to lay off employees to cut costs, it seems like short-term and travel-related businesses are getting hit the hardest. And as shelter-in-place orders spread and more and more Americans self-quarantine at home, the need for these business models will continue to dwindle for the foreseeable future.
Investors with short-term rental properties might want to start thinking about alternative ways to use their homes until the market recovers.