Recent headlines in the wake of Federal layoffs over the last couple of weeks have painted a grim picture of the Washington, DC real estate market, citing federal layoffs as a catalyst for a so-called “crash.” But is this the case?

Let’s separate fact from fiction.

1. Headlines ≠ Reality

The headlines seem to indicate that the market is crashing due to an increase in homes for sale following the layoffs. In reality, inventory rises every year as we move into February. According to a statement released by the Northern Virginia Association of Realtors yesterday, inventory is almost exactly the same as during the same period last year. Their statement is below.

“Facts do not support these ‘reports’. Listing activity in the first two weeks of February is virtually unchanged from a year ago. In Arlington, VA, there were 110 new listings in the first part of February this year compared to 112 new listings during the same period in 2024. The pattern is similar in the broader DC region and throughout the Mid-Atlantic.”

What we are seeing is a very normal start to the spring market in the DC area. Yes, the DC market has experienced a shift from the rapid appreciation and bidding wars of previous years, but this shift has been occurring over the last two years due to interest rates and represents a normalization of the market, not a collapse.

Read our 2025 real estate market prediction blog and see what we’re forecasting for the year ahead (and what came of our 2024 predictions!) Read More Here.

2. Federal Layoffs Have a Limited Impact

First and foremost, our hearts go out to those in our area and across the country who are impacted by federal layoffs. Any type of mass layoffs will have an impact, but likely will not be responsible for the demise of an area’s entire real estate market. While federal job reductions can (and will) create uncertainty, DC’s economy is far more diversified than it once was. The tech, healthcare, legal, and consulting industries continue to drive demand for housing, mitigating any effects of government downsizing. 

We have heard from several of our clients who have been affected by the layoffs. Some who are closer to retirement are considering moving out of the area, but most plan to stay within the DC Metro Area and don’t have plans to move at this time. Either way, any impact we will see from the layoffs would not yet be reflected in homes hitting the market. The turnaround is too quick to be an accurate gauge. Likely, we will see the listings from those moving due to the layoffs in about a month.

Looking for more real estate market insights or curious about what lead to today’s market? Here are some more posts you might find interesting:

• The Future of Interest Rates: What To Expect in 2025
• How Does An Election Year Impact the Real Estate Market in DC
• What A Housing Shortage in DC Means for Buyers

3. Inventory Remains Low

A true market crash requires a surge in supply and a drop in demand. However, DC’s inventory remains historically low, continuing to support home prices. Buyers still face competition for well-priced properties. Homes are still selling, and prices remain stable in most areas, especially in sought-after neighborhoods. Multiple offers are still a reality in this market.

4. Interest Rates Play a Bigger Role

Fluctuating mortgage rates have had a greater impact on buyer behavior than federal layoffs. In fact, so far this year, we have seen a surge in buyers who have been sitting on the fence over the past couple of years decide to re-enter the home buying market, as there is no indication of an impending drop in rates.

Bottom Line

The DC real estate market is not crashing. In fact, this is the busiest start to the year we have had since the COVID years. If you’re considering buying or selling, staying informed and working with an experienced agent is crucial.

Please reach out if it’s important to stay informed and work with someone knowledgeable about the market. We’d love to help! Reach out below, call us directly at 703-362-3221, or email sue@thegoodhardgroup.com / allison@thegoodhartgroup.com today.