CoStar cuts Richmond jobs as Homes.com faces scrutiny

CoStar Group has laid off an undetermined number of Richmond-area employees, the second round of cuts in a year for the Arlington County-based real estate data and analytics company.

CoStar did not immediately return a request for comment Thursday. However, numerous former employees, who worked as writers, editors and video editors for CoStar’s Homes.com brand, an online residential real estate marketplace, posted on LinkedIn Wednesday and Thursday to report they were out of their jobs.

“I am back on the market again, Homes.com just laid off most of the team,” a former Richmond-based CoStar content editor posted to the social media site Wednesday.

On Tuesday, CoStar issued a news release announcing the launch of Homes AI, a “transformative experience” at Homes.com powered by Microsoft Azure OpenAI.

“Consumers can engage in natural, real-time, two-way conversations — by voice or text —to search, refine and explore homes in an interactive experience that feels less like navigating a website and more like being guided by a deeply knowledgeable, trusted real estate advisor,” the release stated.

CoStar purchased Homes.com from Norfolk-based Dominion Enterprises in 2021 for $156 million in cash.

Around the time of CoStar’s February 2025 layoffs — which impacted about 120 employees, according to news reports — the company published a news release announcing plans to hire 1,000 positions “predominantly in Richmond … to support Homes.com growth.”

CoStar also said in the February 2025 news release that it expected to have additional layoffs: “As CoStar Group is committed to efficient allocation of its shareholders’ resources, the company expects to eliminate roles in 2025 from efficiencies gained by using AI and reallocate those resources into other areas.”

CoStar established a global operations center in Richmond in 2016 and reported having 2,350 employees there as of Feb. 27, 2025. The company broke ground on its $460 million downtown Richmond expansion along the James River in 2022 and plans to complete the campus, which will house 3,500 employees, in May.

Investor scrutiny

The performance of Homes.com and of CoStar founder and CEO Andy Florance have drawn public criticism from investors.

The layoffs at Homes.com come after Third Point, a New York-based hedge fund, sent a Jan. 27 letter to CoStar’s board complaining that “the company’s anemic performance can be ascribed entirely to the misallocation of billions of dollars into Homes.com, overseen by a feckless board of directors that has failed to protect shareholders from Mr. Florance’s quixotic quest while rewarding him with exorbitant pay packages.”

CoStar responded the next day with a statement noting that the company had added three new independent directors to the board and named Louise S. Sams the new independent board chair in April 2025. CoStar also approved a redesigned executive compensation program for 2026 featuring “more rigorous and quantitative goals.” Additionally, the statement noted that CoStar is “moderating” its investment in Homes.com.

“We are reducing net investment by $300 million in 2026 and $100+ million annually thereafter to achieve breakeven profitability for the platform exiting 2029,” the company said in the statement.

The D. E. Shaw group, a New York-based global investment and technology development firm, sent its own open letter Feb. 4 to the board about what it described as a refusal to address the “reckless spending of shareholder capital and significant and longstanding underperformance.”

“Under the leadership of CEO Andy Florance, CoStar has continued to dedicate disproportionate attention and resources to its unprofitable Homes.com business,” the company said in the letter.

“This continued investment, despite repeated failures to meet projections, has eroded the company’s once-enviable margins and driven a significant decline in CoStar’s stock price, despite positive momentum in the core businesses,” the letter continued. “As a consequence, today every shareholder who has purchased CoStar’s stock in the last five years has lost money.”

The D. E. Shaw group went on to state that CoStar will have spent more than $3 billion on Homes.com by the end of this year “and diverted the majority of core business earnings over the last four years to fund this venture.”

The letter also criticized the board, saying it is “far too deferential to Mr. Florance” and citing what D. E. Shaw called “the board’s failure to align management’s pay with the company’s performance.”

In 2024, Florance received about $37.4 million in total compensation.

“The board has also enabled Mr. Florance to avail himself of lavish perquisites at shareholder expense, including the use of the company’s multiple private jets for personal travel at a rate more than three times that of peer company chief executives,” the letter stated.  “CoStar’s performance, in our view, does not justify the board’s largesse.”

CoStar issued a response Feb. 5 to the D. E. Shaw group. In it, CoStar noted changes the company had made, including several mentioned in its response to Third Point.

“Just as with Third Point,” CoStar said in the statement, “D. E. Shaw has not heard the answer it wants with respect to Homes.com and so has latched on to a manufactured tale of governance shortcomings starring a CEO who would be unrecognizable to most of CoStar Group’s long-term stakeholders.

“The reality is that CoStar Group’s management team and board have tried to help D. E. Shaw understand the value creation potential for Homes.com and the fact that the company is on a responsible plan to realize it,” the statement continued.

In 2024, CoStar reported $2.74 billion in revenue, up 11% year over year. The company will report its fourth quarter and 2025 earnings on Feb. 24.

CoStar reported having 6,593 employees as of Jan. 31, 2025. The company announced in February 2024 it would move its headquarters from Washington, D.C., to Arlington County and said later that year it expected to complete the move by early 2025.

VCU Board of Visitors

In other news, on Tuesday, the state Senate elected not to confirm Florance to the Virginia Commonwealth University Board of Visitors. Last summer, then-Gov. Glenn Youngkin announced plans to reappoint Florance to the board. Former Gov. Ralph Northam initially tapped Florance for the board in 2021.

With a 21-19 party-line vote Tuesday, the Senate also declined to confirm Lara Tyler Chambers, founder and co-owner of Richmond-based engineering and real estate developer Tyler Development Group, and Lori Jennings, founder of a Richmond-based tech executive search firm, to the VCU board.

Those were just a few of several individuals appointed by Youngkin to state boards whom the General Assembly failed to confirm Tuesday. Higher education governing boards have been a hot topic since former University of Virginia President Jim Ryan resigned due to pressure from the Trump administration last summer, and they previously gained scrutiny when the Virginia Military Institute board declined in 2025 to renew the contract of Maj. Gen. Cedric Wins, the school’s first Black superintendent.