Does Zillow Own Redfin? Companies Hit by Housing Market Downturn
On June 14, Redfin CEO Glen Kelman announced that the company was laying off 8 percent of its employees. Does Zillow own Redfin? Here's what you need to know.
June 15 2022, Published 2:02 p.m. ET
Rising mortgage rates and slowing home sales have put Redfin in a place it hoped to avoid. On June 14, Redfin CEO Glen Kelman announced that the company was laying off 8 percent of its employees. Does Zillow own Redfin?
No, Zillow doesn’t own Redfin. Although both Zillow and Redfin are located in Seattle and deal in real estate listings, they operate a bit differently.
What’s the difference between Zillow and Redfin?
Zillow is a real estate marketplace, while Redfin is a discount real estate brokerage. As a brokerage, Redfin gets its home listings from the Multiple Listing Service (MLS). It also has its own agents. Home sellers can sell their homes directly through Redfin without working with a real estate agent, who usually takes a higher commission than Redfin agents. Homebuyers can also buy homes quickly by making a cash offer through the “Redfin Now” iBuying service.
Zillow doesn’t have access to the MLS, so it gets its listings through agreements with different real estate companies. Zillow also allows FSBO (for sale by owner) listings, which aren’t available on Redfin.
Both Zillow and Redfin are publicly traded companies. Zillow owns the Trulia online real estate marketplace. Redfin owns the rental media company RentPath, which is responsible for Rentals.com, rent.com, Lovely, and the Apartment Guide.
Mortgage rates are at the highest level since 2008.
The U.S. housing market shows signs of cooling after reaching a record high in 2021. The downturn is linked to rising interest rates. According to the Mortgage Bankers Association, the current 5.65 percent rate for a 30-year fixed rate mortgage is the highest since 2008.
In a June 14 letter to Redfin employees, Kelman said demand in May was 17 percent below expectations. “We don’t have enough work for our agents and support staff, and fewer sales leaves us with less money for headquarters projects.”
Zillow and Redfin stocks are down from their peak in early 2021.
Redfin stock has taken a hit over the last year, dropping by over 86 percent. At its peak in February 2021, Redfin shares were trading at more than $96 per share. On June 15, shares were trading at just over $8.
“If falling from $97 per share to $8 doesn’t put a company through heck, I don’t know what does,” Kelman wrote. “We could be facing years, not months, of fewer home sales, and Redfin still plans to thrive.”
Zillow stock is down from its peak in February 2021, when shares were trading at over $202. On June 15, Zillow shares were trading at just over $31 per share.
Compass will lay off 10 percent of its workforce.
Real estate company Compass also recently announced that it was laying off 10 percent of its workforce, about 450 employees, and shutting down its Modus Technologies software platform.
“Due to the clear signals of slowing economic growth, we’ve taken a number of measures to safeguard our business and reduce costs, including the difficult decision to reduce the size of our employee team by approximately 10 percent,” a Compass spokesperson said in a statement, as reported in the New York Post.