About 10% of the DC area workforce is composed of federal employees. There are also many federal contractors or workers dependent on federal spending. It stands to reason that cuts to the workforce and spending will have an impact, but the extent of that impact remains to be seen. It’s too early to know. And there are some countervailing forces that could bolster the local market. Here’s what we’re seeing.
Anecdotally, buyers and sellers are generally moving forward with their plans to buy or sell but with an awareness of how the larger context affects them. Some buyers, especially those with federal employment, are pausing their search. Others are moving forward and some feel that the current timing may be an opportunity for less competition. While the condo market tends to be softer, the market for houses and rowhouses is stronger. We’re still seeing houses, especially those viewed as “forever” homes, continuing to be competitive and, in some cases, receive multiple offers. Some sellers who have been considering selling in the next year are thinking about moving up their sale to capitalize on the known strength of the current market rather waiting.
From a data perspective, it’s too early to know the extent of the impact. Despite misleading news to the contrary, there is not a dramatic move among area homeowners to sell. Keep in mind that a decision to list a property is often a few months or more in the making, so the number of new listings on the market now is generally not reflective of federal job losses in the past few weeks. It’s also helpful to know that, as 2025 began, the local Multiple Listing Service was projecting a 14% increase in the number of new listings for the year (relative to 2024) as more sellers decide not to wait any longer to make a move in hope of significantly lower mortgage rates. With that context in mind, new listings for the week ending March 9 are up about 11% from the same time last year. The median sale price for the month of February is up 6.6% from February of 2024, while the number of closed sales is down 4.1%. The number of property showings for the week ending March 9 is up about 9.8% from last week but down 5.5% from the same time last year. It’s worth noting that there is variability across housing sectors (condos vs. houses), areas within the DMV, and at different price points.
In addition to policy actions that are inducing uncertainty that we expect to be negative for the real estate market, there are some countervailing forces. For example a back-to-work mandate should tend to increase buyer demand in and close to DC. Also, recessionary concerns tend to have the positive impact of reducing mortgage rates, which has happened over the past several weeks resulting in an increase in mortgage applications. Demographically, there’s the millennial population bulge which is now in prime home buying years, fueling demand. And supply of detached and townhouses in and close to DC is inherently constrained by the lack of significant new space to build, which increases competition for the houses that are available. All of these things tend to bolster the local real estate market.
Would you like to take a deeper dive into what we’re seeing in your neighborhood or one you’d like to move to? Reach out. We’re happy to talk!
