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(Bloomberg)—Opendoor Technologies Inc. is laying off about 550 employees after higher mortgage rates cratered US housing demand.

The layoffs will reduce Opendoor’s headcount by about 18%, according to a company blog post. The cuts come after an abrupt shift in prices forced the company to sell homes for less than it paid for them.

“The reality is, we’re navigating one of the most challenging real estate markets in 40 years and need to adjust our business,” Chief Executive Officer Eric Wu wrote. “To manage through the turbulence in the market, we’ve worked quickly over the last two quarters to reduce our operating expenses.”

Opendoor, which practices a data-driven spin on home-flipping called iBuying, was among companies caught by a sudden turn in the housing market as soaring borrowing costs pushed some buyers to the sideline. The iBuying model relies on acquiring homes, making some repairs and then selling the properties, often in a short period of time.

The company sought to cut millions of fixed expenses earlier this year as it navigated the market’s shift, Wu said in the blog post. Employees will receive at least 10 weeks of severance pay.

“We did not make the decision to downsize the team today lightly,” Wu said.

The company will report third-quarter results after the close of trading Thursday, when it is expected to post losses of $171 million before interest, taxes, depreciation and amortization, according to the average of analyst estimates compiled by Bloomberg.

Shares fell nearly 2.9% to $2.37 at 12:33 p.m. in New York, down 84% from the beginning of the year.

Other housing companies including Zillow Group Inc. have  laid off workers in recent months. Compass Inc. cut jobs in September after a round of layoffs months earlier. Redfin Corp. has also pared its workforce.

To contact the author of this story: Patrick Clark in New York at [email protected]

© 2022 Bloomberg L.P.

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