When President Donald Trump announced his plans to whittle down the federal workforce earlier this year, there were concerns about what that would mean for the Washington, D.C., housing market.
For months, the feared slowdown didn’t materialize. That changed in May, according to local real estate agents and recent market data.
“At this point, many of us know folks in the double digits who have lost their jobs,” Jennifer Touchette, an agent with the Your P&rtners team at Compass, told Homes.com. “I feel like the city is crawling with overeducated attorneys looking for jobs. I haven’t seen the data, but certainly from talking to friends and clients and hearing their stories.”
The exact number of federal employees who were let go or took buyouts isn’t available, but the latest report on the labor market from the Bureau of Labor Statistics showed that between January and May, the federal government lost 59,000 positions.
More than agent anecdotes, a report Bright MLS released Wednesday — one of the online platforms where real estate agents in the mid-Atlantic share their listings — revealed that in May, more than half of D.C.-area agents reported that federal workforce reductions are disrupting market activity.
“This spring marked a turning point for the Washington housing market,” Lisa Sturtevant, chief economist at Bright MLS, said in a statement. “Federal buyouts provided older, often higher-income homeowners a chance to cash out and relocate, but the ripple effects are just beginning.”
There's a new mismatch between inventory and demand
Some local agents say they’ve felt the biggest change in the number of homes for sale — and how those properties are selling.
For one, there’s been an increase in for-sale inventory in D.C. compared to last year. Take the third week of May, for example. In 2024, there were 3,194 active listings in D.C. This year, there were 4,021.
But that increase in listings hasn’t been met with a reciprocal jump in buyer demand. Even as more properties have hit the D.C. market in May and June of this year, the number of sold listings has lagged last year’s sales, data from Homes.com showed.
Real estate agents said they’ve felt the mismatch in buyer interest.
“We’ve seen some clawback in terms of showing activity,” Micah Smith, an agent with HRLS Partners at TTR Sotheby’s International Realty, told Homes.com.
Touchette said her team first noticed the slowdown around March, but she said it’s gotten worse. Whereas buyers in the winter and spring were nervous about losing their jobs, now, many have “actually lost their jobs.”
“It’s reflected in no showings,” she said. “Before, there’d be showings, but people would be slow to make an offer. Now, we’re just not getting showings.”
The condo market is 'almost dead'
At the same time, some listings are sitting on the market for slightly longer. “We’re back to patience versus price,” Touchette said.
Homes.com data showed that the actual change in average days on market is only a few days longer this year when compared to last year, but real estate agents noted that some properties, especially condos, can take longer to sell.
“Condos that have no private outdoor space and no parking in the city, in the district, are just almost dead. There’s really just not much action,” Touchette said.
Paniz Asgari of Compass’ Asgari Group said part of the problem is that the buyer pool in the condo market can be more sensitive to affordability challenges and uncertainty.
“People can’t afford it, or they’re scared to make the decision,” Asgari told Homes.com, noting that first-time buyers have been especially affected by the recent shifts in the market.
There are also condo fees that can deter buyers, according to Touchette. One of her listings has one that's $1,000-plus a month.
As of Thursday, there were about 1,400 condo units listed for sale in Washington, D.C. on Homes.com. Of those units, roughly 400 had been on the market for three or more months. In the past three months, 600 condos have sold.
From his team’s perspective, Smith said, the condo market and the sub-$2 million market are “being hit the hardest by some of the job cuts.”
Buyers and sellers are finding alternatives
Another trend that could emerge: Sellers leaving D.C., and buyers dropping out of the market.
The data from Bright MLS found that in D.C., 15% of spring home sales were due to retirement, compared to just 10% across the platform’s service area.
“Many of these retirees were federal employees with above-average incomes and fully paid-off homes, giving them the financial means and incentive to take buyout packages and transition out of the region ahead of potential further restructuring or job instability,” the report said.
Though Asgari said she hadn’t had any clients retire because of the shakeup, she noted that some have changed their minds about living in D.C. given the current political landscape.
In all, she said she’s had about four of 18 buyers drop out of the market “because of the changes and their circumstances.” One client came to her about moving to Canada. Another decided to move back to their home state.
“They thought they were going to stay here, retire here, do everything here,” she said. “They bought into the co-op that they wanted. It was a dream purchase. Their house looks like a museum; it’s gorgeous. But really with the current administration, it’s just not a good fit for them personally, and it’s a reason to move.”
For Touchette, adapting to the current housing market has meant “the R-word," renting.
“In some cases, we are actually encouraging folks to rent,” she said of clients who have had difficulty selling their properties. “Sometimes it is not the best-case scenario to list it.”
'It's not a crash'
Though local agents acknowledge that the D.C. market faces disruptions, they also brought some perspective.
For one, the influx of inventory comes after years of a serious undersupply, so it’s not necessarily an oversaturation, according to Smith from HRLS Partners.
“We’ve been in a housing recession in terms of units for several years now,” he said, “so it’s going to take a lot more inventory to really put downward pressure on the market.”
It’s also more than just federal workforce changes that are affecting the way buyers and sellers think about the housing market right now. Mortgage rates are still elevated; prices are still high; and the word of the year when it comes to describing the economy and geopolitical landscape seems to be “uncertain.”
“We live in Washington, D.C., there are a lot of elements that are coming into play at the same time,” Asgari said.
The chaos will eventually give way to a “new normal,” when a “level of consistency” will develop and the market will pick up again, she said.
Sturtevant of Bright MLS also noted that the market is still in flux, and said things could change again this summer, especially as families with school-age children take advantage of the end of the school year.
“More selling activity may still be on the horizon,” she said. “By fall, the increase in inventory in the region could lead to flat or falling home prices in some markets in the region.”
All told, Asgari said, the up-close picture of the D.C. housing market might be causing concern, but zoomed out, it’s more about perspective.
“It’s not a devastating housing market. It’s not a crash,” she said. “But if you’re comparing it to time frames when we had really low interest rates and a ton of market activity, this is completely different.”