The company has vowed to slash over 35 percent of its spending on Homes.com after years of attempting to build a fourth major real estate listings search portal.
CoStar laid off members of the Homes.com team this week as the company began implementing a series of cost cuts against the backdrop of investor pressure.
In total, the company cut about 200 roles from a workforce of over 8,000, according to a source with knowledge of the situation. CoStar did not say whether the cuts were concentrated in specific teams, whether it had shifted away from using writers to generate content to enrich listings or whether it had shifted sales roles from Homes.com to other segments of the company.
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Instead, it confirmed in a statement that it had made layoffs and said that it was leaning into artificial intelligence going forward.
“To align our organization with these strategic objectives and position the company for continued success, we have made the difficult decision to eliminate certain roles within the organization,” a CoStar Group spokesperson said in a statement. “This was not a decision taken lightly, and we are deeply appreciative of the contributions that each affected team member has made during this transformative period.”
The cuts come at a time when CoStar has promised to cut $300 million in spending on Homes.com this year, a total that amounts to over 35 percent compared to its spending last year. The company said it would cut over $100 million each year through 2030, when it believes Homes.com will reach profitability.
The layoffs were announced a day after CoStar unveiled Homes AI, an artificial intelligence search assistant.
The cutback follows mounting pressure from investors who questioned CoStar’s aggressive move into the residential space after dominating the commercial real estate space.
CoStar has suggested the impending cost cuts mark the end of an investment period and the beginning of a new era where Homes.com’s value proposition will be proven in the marketplace.
“Over the past two years, we have experienced a period of rapid growth following the initial investment phase and the successful launch of Homes.com,” the company spokesperson said. “This momentum has enabled us to reach important milestones and expand our services to better meet the needs of our customers.”
CoStar also cited AI last year when it eliminated some roles while planning to hire for others, including increasing its sales force at Homes.com, according to local news reports.
The ongoing changes come as CoStar is defending itself from activist investors who have criticized the company’s heavy spending on Homes.com in recent years.
D.E. Shaw and Third Point each said that the focus on attempting to build a portal that can compete for consumer awareness with Zillow, Redfin and Realtor.com was misguided. D.E. Shaw said it was time for the company to abandon the effort, saying Homes.com was dragging down the performance of CoStar’s primarily commercial real estate brands.
CoStar is set to announce its fourth quarter earnings next week.
Update: This post was updated after publication with numbers on the job cuts.
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