Federal job cuts starting to impact DC market
A rise in retirement-related home sales is creating more inventory and starting to put pressure on high prices in the D.C. area, a Bright MLS survey suggests.
It took some time, but the federal job cuts that began earlier this year are now starting to impact the residential real estate market in Washington, D.C., according to a new survey out today from Bright MLS.
Retirement driving many sales: The survey found that there were 50% more retirement-related sales in the D.C. area than in other markets in the Mid-Atlantic region, suggesting a significant number of older federal workers took buyout offers or were laid off. The survey collected responses from agents and brokers who worked with home sellers on transactions that were completed in March, April and May.
This spring, 15% of home sales in the D.C. area were attributed to retirement, compared to 10% across other communities that Bright MLS serves.
More than half of the agents surveyed (54%) said layoffs and job cuts are impacting market activity, and 38% suggested these workforce reductions are also contributing to a downtick in home prices, though prices in the area are still above national averages.
While Bright MLS doesn't have a forecast on how much prices in the D.C. area will drop, it's not expected to be significant right away, said Lisa Sturtevant, chief economist at Bright MLS. She expects some metro-area variation, however, with more significant price drops in the outer counties of the region.
Sturtevant also expects price drops around D.C. to be smaller than what some parts of the country are seeing.
"Most of the price drops we're currently seeing in the South are highly concentrated in Florida and Texas. I expect that those markets — where inventory is rising rapidly — will likely have more significant price drops than the D.C. area," Sturtevant told Real Estate News.
More market activity expected: The D.C. region is expected to see a continued increase in housing inventory into the summer.
"This spring marked a turning point for the Washington housing market," Sturtevant said. "Federal buyouts provided older, often higher-income homeowners a chance to cash out and relocate, but the ripple effects are just beginning. As more impacted families list homes post-school year, we could see further price pressure across the region this summer and fall."