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Why It Matters
Since President Donald Trump's inauguration on January 20, he and billionaire Elon Musk, a "special government employee" who leads the Department of Government Efficiency (DOGE), have moved swiftly to cut the size of the federal government, limiting new hiring and firing thousands of workers.
On Thursday, the Department of Veterans Affairs, which provides health care for American veterans, said it had to lay off more than 1,000 employees in their probationary periods, Reuters reported. At the same time, Politico reported, the U.S. Forest Service was set to dismiss more than 3,000 workers. Other federal agencies have been and are expected to continue being affected by the mass layoffs.
Trump's and Musk's efforts to shrink what they called a bloated federal government — efforts that have defied expectations, norms and legal limits — are likely to have ripple effects far beyond Washington, experts have warned.
Redfin agents in Washington, D.C., where there's a high concentration of federal workers, have found that the city's housing market is in a state of chaos.
Trump has signed an executive order urging federal employees to return to their offices or lose their jobs, while the federal purge ordered by Musk and DOGE has left workers wondering whether they'll have a job to go back to at all.
The result is that federal workers in Washington, D.C., and other cities with high numbers of government employees are either feeling motivated to buy new homes or discouraged from buying or selling.
According to a recent report by John Burns Research and Consulting, which produces independent research on the U.S. housing market, Trump's and Musk's efforts to reduce the federal workforce might create new challenges for the already struggling U.S. housing market, "especially in the Washington, D.C., region, where federal employment comprises approximately 375,000 jobs in the workforce."
Other states — including California, Texas and Florida, which are also home to large federal workforces — "may also experience market strain," researchers at the company warned.
A shrinking of the workforce in cities where federal jobs prompt people to move in and buy properties could directly affect housing demand, they added. Data shows that housing demand in Washington, D.C., had already been affected even before Trump's inauguration: New home closings dropped by 16 percent in the year leading up to December 2024, according to John Burns' latest D.C. market analysis, and the resale market was stagnant.
What People Are Saying
Stuart Naranch, a Redfin Premier agent in Washington, D.C., said in a statement shared by the real estate brokerage: "I recently worked with a couple who bought their dream home with me a few years ago, but now they're considering listing because they want to be closer to public transportation. They both work for the government and want a more convenient commute because they'll need to return to in-person work soon."
Jo Chavez, a Redfin Premier agent in Kansas City, Missouri, said in a statement: "Since the inauguration, I've met with a few people, including one federal government employee, who are selling specifically because of anticipated return-to-office orders. I also spoke to a client who was looking to sell and upgrade to a larger home, but he canceled those plans because he's worried about losing his job due to restructuring of government jobs."
An anonymous D.C. area builder told John Burns Research and Consulting: "We are a government-worker-dependent market, and we are very concerned about the government layoffs in all departments. We already had two contracts cancel because one of the couple's jobs had been eliminated. Others are worried about work-from-home policies that have changed and now will have to commute into D.C. every day starting in March."
What Happens Next
Government downsizing remains a major priority of the Trump administration, and it's likely that cuts will continue in the coming weeks and months. The effects of future layoffs could reduce housing demand in the entire D.C. area, according to an analysis by Devon and Dustin Fox Homes, especially in the neighborhoods of Washington, D.C.; Arlington, Alexandria and Fairfax County in northern Virginia; and Silver Spring, Bethesda and Rockville in Maryland.
A drop in demand in these areas is likely to increase competition among sellers and lead to a softening of home prices. While this may be good news for buyers struggling with high mortgage rates and high prices, local businesses may suffer from dampened economic activity in the area.
Reader Comments
Apparently there are many federal buildings that are empty or mostly empty. The housing market in DC will plummet.