Austin-based real estate startup Homeward is laying off dozens of employees following market shifts and reduced demand in homebuying, according to the company’s CEO.
Homeward, which was founded in 2018, operates a digital platform that helps users buy and sell their homes. CEO and founder Tim Heyl also founded Austin-based real estate brokerage firm the Heyl Group.
Following a national dip in real estate demand, Homeward will lay off about 20% of its workforce, Heyl said in a blog post.
Homeward had over 600 employees prior to the reduction, and the company said about 15% of the layoffs were of Austin-based employees, a company spokesperson confirmed.
In the blog post, Heyl said the affected employees will receive severance pay based on tenure, as well as health benefits through the end of August, outplacement services with its recruiting team, stock options without a vesting cliff, and will not have non-compete clauses.
“Despite having a strong financial start to the year, we are currently staffed for more growth than we’re now forecasting,” Heyl said. "This reduction... is necessary for our future success, but that doesn’t make it easier to part with so many of our colleagues. Layoffs carry real consequences for people, and this isn’t a decision we make lightly.”
“The continuing acceleration and severity of the market shift has forced us to consider deeper changes to our business. It’s become clear that these headwinds are part of broader challenges facing our economy. We don’t know how long real estate will continue to soften, so we must plan for a less active market.”
Homeward was created to help buyers afford a new home before selling their existing home. The startup provides credit to make an all-cash offer on new homes and then buy back their home from Homeward once their mortgage is ready. The company also lets people buy a new home before they list and sell their existing home, and if the house doesn’t sell within six months, Homeward will buy it at a prearranged price.
Real estate startups have boomed in recent years, including in Austin, where at least 30 tech firms are focused on the real estate market, according to the Austin Chamber of Commerce.
But Heyl said the industry has taken a hit recently.
“The market has changed dramatically in recent months: high inflation has persisted, interest rates are rising dramatically, and home sales have fallen from historic highs. Coupled with affordability concerns, fewer buyers are seeking homes. There is also less demand for cash offer products that differentiate buyers in the homebuying process," he said.
Homeward operates in seven states including Texas, and the company most recently expanded into Oregon and Washington.
The layoffs follow a period of rapid growth for Homeward, which said it hired more than 250 people in 2021 alone.
Homeward raised $371 million in funding last year, which it said it would use to grow its business, meet demand and expand into new markets. In 2020, Homeward raised a $105 million funding round.
This article originally appeared on Austin American-Statesman: Austin real estate startup Homeward to lay off 20% of its employees