Despite layoff chaos, brokers hopeful for a strong spring
With the Trump administration ordering the termination of more than 100,000 federal workers in its first two months in office, the effects of downsizing are being felt in the Washington, DC, housing market.
The Department of Government Efficiency’s (DOGE’s) government downsizing efforts mean potential homebuyers in the DC market are hitting pause, according to Kristy Hardy, executive vice president and area manager of Atlantic Coast Mortgage, who told Mortgage Professional America those layoffs are causing would-be buyers to think twice about jumping into the market.
“People are starting to hesitate a little bit,” she said. “People are starting to get a little nervous. It has created uncertainty in our market. Some of the buyers that were ready to buy have decided to wait it out a little bit.”
CNN’s latest tally of the number of federal workers who have been fired by the administration and DOGE reached 121,361 as of Friday.
The New York Times noted that at least 12% of the 2.4 million civilian federal workers could be affected. Many of those employees live and work near the nation’s capital.
The federal terminations were part of a significant surge in layoffs nationwide in February, as 172,017 jobs were eliminated during the month, representing a 245% increase from January. It was the highest number of layoffs since the height of the pandemic in July 2020.
With those firings combined with potential large-scale tariffs set to take effect on Wednesday, Hardy said all these factors are giving people in her market cause for second thought.
“There is just a lot of uncertainty right now,” Hardy said. “I think everyone is just waiting for the fallout of whatever is going to happen. It’s just too early to predict what is going to happen in this area.”
This sentiment echoes the thoughts of First American chief economist Mark Fleming, who said new home sales were below what was needed, especially considering rates decreased in the month of February. He noted that builders still face supply-side challenges, which may become more difficult when tariffs are enacted.
Mark Fleming of First American notes that home sales are still lower due to supply-side challenges and potential tariffs. Lower mortgage rates help push new-home sales higher | Mortgage Professional
— Mortgage Professional America Magazine (@MPAMagazineUS) March 28, 2025
Job cuts may open up opportunities in the market
However, Hardy noted that brokers may see an opportunity to help buyers get to the market. She said that the DC area has suffered a shortage in housing inventory, and with workers potentially having to relocate for new job opportunities, the market may pick up again.
“This could actually help the housing market a bit,” Hardy said. “The DC metro area inventory has been so short. It’s been one of our biggest concerns. Supply does not match demand. It’s been a seller’s market for so long. There might be some deals to be had for buyers.”
While federal workers who have lost their jobs may be leaving the Washington, DC area, other federal workers who have been ordered back into the office may be taking their place in the housing market, Hardy noted. Many people who had moved farther away from the capital while working from home could be looking to relocate closer to reduce the now-required daily commute.
Steady long-term interest rates may lead buyers to take action
Hardy also believes that a forecast of steady or slightly declining interest rates may encourage potential buyers to stop waiting and enter the market.
Fannie Mae announced on Friday that it expected interest rates to end 2025 at 6.3% and 2026 at 6.2%. While those are slight declines from current rates, it is not a major decline that would benefit those wanting to enter the mortgage market by waiting for a drop.
With rates forecasted to hold steady, Hardy expects to be busy this spring.
“Overall, interest rates have stabilized,” Hardy said. “People have been waiting for rates to come down. But there is still a shortage in inventory, so buyers shouldn’t expect home prices to decrease. The market is still hot, with multiple offers as long as the price is right.”
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