Washington’s housing market has weathered this year’s wave of federal layoffs better than many expected, but the government shutdown could be what finally tips it.
Thousands of federal workers who took buyouts earlier in the year have stopped receiving pay and agencies are preparing permanent cuts, meaning more belt-tightening looms, the Wall Street Journal reported. The White House budget office’s directive to shrink agency staff could add to unemployment, eroding one of the region’s historic strengths: its stable job base.
Roughly two-thirds of the 154,000 employees who accepted buyouts saw their paychecks end this week, according to the Office of Personnel Management. The rest will roll off the payroll by year’s end.
Not all of those people are based in the capital region, but their departures nevertheless remove a key financial cushion for homeowners already grappling with a slowing market.
The market is showing early signs of strain. Active listings in the Washington metro area jumped nearly 55 percent in August from a year earlier, the biggest increase among the nation’s 50 largest metros, Realtor.com data showed. Homes are sitting longer and buyers have grown cautious amid political uncertainty, tariffs and mortgage rates hovering above 6 percent.
Still, Bright MLS reported that sales through August were down less than 1 percent year over year and prices remain up, indicative of how little inventory remains after years of tight supply.
Part of the market’s resilience comes from homeowners’ balance sheets. More than 60 percent of mortgaged households in the region have locked rates below 4 percent, compared with just over half nationwide, according to data firm Intercontinental Exchange. With refinancing off the table, many are staying put rather than selling into a high-rate environment.
Agents say the result is a market in limbo: listings rising, buyers retreating, but few distress sales.
Condo owners, however, are feeling more pain. Units in the District are taking longer to move, weighed down by rising association fees and buyer skittishness. The weakness has would-be sellers pivoting to rentals until demand returns.
For now, the capital’s housing market — long buoyed by the steady flow of federal paychecks — is bracing for an extended test of that resilience as the shutdown drags on.
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