The company, valued at $2 billion as of August 2021, has reduced its employee count by 40 people, the latest in a run of real estate companies that have enacted layoffs.
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Even unicorns are subject to market fluctuations.
Divvy Homes, valued at $2 billion as of August 2021, has reduced its employee count by 12 percent, or 40 people, in response to the changing housing market, according to Catherine Cuello-Fuente, a communications strategist who once worked for the lease-to-own company.
News of the layoffs was also reported by The Aim Group.
Divvy declined to comment to Inman, but in a statement to Aim Group, Kyle Zink, Vice President of marketing and communications cited, “worsening economic conditions.”
“Although we recognized these macroeconomic challenges in late summer 2022 and took steps to substantially reduce our cost structure in response, it unfortunately was not enough,” Zink said. “Realistically, the macro environment is likely to remain volatile and challenging for the foreseeable future. As a result, we needed to adjust headcount to reflect the new reality today.”
Divvy purchases homes on behalf of its customers and then rents the homes back to them while the customers continue to build equity on the properties. Initially, the renter contributes 1 to 2 percent of the home value to the purchase, then about 25 percent of each monthly payment that follows goes toward saving up for a down payment.
The agreement between renters and Divvy is organized so that a renter can save up to 10 percent of the home’s value over the course of a three-year lease, but can also buy the home at any time. Or if the renter decides against the home, they can walk away and receive cash for their savings.
Divvy rose quickly from the tech hotbed of California’s Bay Area to address an increasingly difficult housing market for those unable to fully afford a down payment, yet had enough financial wherewithal to tackle the ongoing burdens of home ownership.
“At the start of the pandemic, we made a commitment to help and support as many future homeowners as possible,” said Adena Hefets, co-founder and CEO of Divvy Homes, in a February 2021 statement after securing $110 million in Series C funding.
The company kept collecting funding, nailing down another $200 million in an August 2021 Series D round. Two months later, Inman reported on another $735 million in debt financing.
Divvy is the latest of many real estate brokerages and technology-forward, alternative real estate models to address the market with staff reductions. Compass, Better, Flyhomes and Homelight are some of the notables.
This is an ongoing story.