Earlier this year, when DOGE descended on the District and began laying off federal workers—eliminating around 59,000 jobs—it seemed inevitable that the cuts would soften the local housing market. Now, some newly released data is confirming that yes, the DOGE effect is real.
According to a Bright MLS survey of area real estate agents who were actively working with a buyer or seller in May, 37 percent reported that they had worked with a client who was buying or selling because of the federal layoffs. In addition, 15 percent of all spring sales in the DC area were motivated by retirement, as compared to 10 percent in the larger East Coast region covered by Bright MLS. Which suggests that many of the retirees in the DC region are aging federal workers who accepted the Trump administration’s buyout offers and sold their area homes. And finally, 43 percent of the surveyed agents said that the layoffs and budget cuts have increased the number of sellers in their area market, and 38 percent reported that prices are falling as a result.
Until now, the DC market has demonstrated a stubborn resilience, according to monthly data released by Bright MLS. In May, home prices hit a record high in the region, with a median sold price of $659,950, up from $640,000 a year ago. The number of closed sales was down, but pending sales were up, suggesting that some buyers were taking advantage of the increase in inventory. Those buyers tended to be more affluent and wanted single-family homes—and that, coupled with softness in the condo market, helps explain the record high in prices. Pending sales showed the largest increases year-over-year in Arlington, Falls Church City, Alexandria City, and Fairfax.
“It’s been a totally different dynamic,” says Roby Thompson of Long and Foster, of the way the market has shifted over the past two years. Entry-level buyers can no longer afford to trade up from a starter condo to something larger, he says. Instead, most of his transactions have been single-family homes, with buyers who can put down 50 percent or more. “Most of the buyers are financially really strong,” he says. “I’ve had to shift my focus out of condo sales and move into the single-family housing market.”
Where will the market go from here, post-DOGE? “The ripple effects are just beginning,” Lisa Sturtevant, the chief economist at Bright MLS, said in a release. Many federal employees may have been waiting until the end of the school year to list their properties, which could produce another wave of inventory this summer—and lead to more downward pressure on prices.
