The Washington, D.C., metro area has long been one of the most cutthroat, expensive places to buy a home. Median listing prices in the area top $600,000, and inventory never bounced back from pandemic lows, sparking fierce competition and regular bidding wars in recent years.
President Trump’s efforts to dramatically shrink the federal government, the dominant employer in the region, threatened to upend those dynamics. While agents and economists say the first spring homebuying season of his second term has been largely business as usual, some signs of weakness are starting to emerge.
Home showings are down, and sellers have become more amenable to price cuts. The market is still firmly tilted in favor of sellers, but buyers are making inroads and many agents say they’re bracing for the possibility of slowing sales and lower prices in the months ahead.
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“I think [sellers] should list as soon as possible,” said Dustin Fox, who leads the Fox Homes Team in Fairfax, Va. “I could be wrong, and your price could continue to go up, but that’s not what I’m seeing right now.”
The D.C. metro area is home to more than 6 million residents and includes all of Washington, several counties in Maryland and Virginia, and a sliver of West Virginia. It’s among the wealthiest places in the country — several counties in Maryland and Virginia rank among the top 10 highest earning with median household incomes of over $120,000. It’s also the most educated with over half its residents holding at least a bachelor’s degree.
Historically, the region’s affluence and education have helped it weather recessions better than average. The security of government jobs has also been an advantage: Nearly 1 in 5 of the region’s workers are employed by the federal government, and countless more work in adjacent fields like government contracting or federal grant-funded nonprofits.
‘So much craziness’
This time, Trump’s broad government cuts threaten that long stable foundation. Tariffs and signs of a wider economic downturn also have buyers and sellers on edge. At the moment, it’s hard to untangle how much of the slowing market comes from fears about the Department of Government Efficiency’s newest layoff targets or more general anxiety about the broader economy or tariff-induced market swings.
Learn more: Mortgage rate predictions in an unsteady economy
Jack Wang, who leads PowerHouse Realty Group in Chevy Chase, Md., said there’s no direct line between the shrinking of the government and what he’s seeing in recent transactions in Maryland. Still, his spring is off to a slow start, which he attributes to general uncertainty.
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“[Buyers] have to find a home that they absolutely love in order for them to take on the inherent risk of buying and making a big purchase with so much craziness all around,” he said.
Buying a home in the D.C. metro area can be a challenge even for relatively high earners. Home prices in the area shot up dramatically in the aftermath of the pandemic and remain around 30% above late 2019 levels, averaging $605,000 across the region.
BETHESDA, MD- JUNE 20: A home for sale in the Woodhaven neighborhood of Bethesda, Maryland. (Amanda Andrade-Rhoades/For The Washington Post via Getty Images) ·The Washington Post via Getty Images
Housing costs in the region’s vast suburbs vary widely based on factors like proximity to public transit and the Capital Beltway. Many close-in suburbs have median listing prices over $1 million. What’s available for sale is equally varied, from historic row houses that dot the city’s core to new single-family developments in the exurbs.
While for-sale inventory is on the rise, there were only around 10,000 homes on the market in March, a level that remains far below historical norms.
In suburban Virginia, Fox said he’s noticed an uptick in seller activity since DOGE-related cuts began. He’s recently listed homes on behalf of laid-off FBI agents and diversity, equity, and inclusion specialists. And he too has seen buyers grow hesitant and opt to pause searches due to factors like uncertain job contract status or tariff fears.
Learn more: What Trump’s tariffs mean for the economy and your wallet
Uncertainty reigns
But the layoff effect hasn’t shown up in broader housing market data — at least not yet. Lisa Sturtevant, chief economist at Bright MLS, a North Bethesda, Md.-based multiple listing service that serves the mid-Atlantic region, said she’s watching potential leading indicators like the percentage of listings that have seen a price drop. Those are on the rise in the region, which could be “a little bit of a DOGE effect,” she said.
Other indicators that point to a slowdown, like falling housing contract activity, have been prevalent in other East Coast housing markets as well, making federal layoffs a less likely driver. As of last week, new pending sales in the D.C. area were down 3.3% from a year earlier, compared with a 3.7% drop in the broader Bright MLS region, which also includes Philadelphia, Delaware, and Baltimore.
“There’s a lot of uncertainty, but so far, we aren’t seeing a big, notable impact in the aggregate on the Washington area housing market as a result of the federal workforce changes,” Sturtevant said.
When Kirsten Craft was house hunting earlier this year, she and her husband cast a wide net, scoping out options in Washington and the inner-ring Maryland suburbs of Takoma Park, Silver Spring and College Park that would give them a backyard for their dog and a parking spot for their camper van.
Given the high mortgage rate environment and economic unknowns, she was taken aback by the competition they still encountered. They ultimately landed a home in another close-in suburb, Riverdale Park, Md., by offering $50,000 over its asking price and waiving contingencies, beating out seven other offers.
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“I was honestly really surprised at how competitive it still was,” said Craft, 33. “The D.C. housing market is crazy.”
In nearby Montgomery County, Maryland, Susan Wood, 62, and her husband are taking time with their home search amid signs that the market is beginning to shift. Many homes they’ve toured in the county and Northwest Washington have been lingering on the market and had their prices reduced, and she expects more listings to appear as uncertainty persists.
“I do think the market is going to soften,” she said. “We want a house, but we’re not in a hurry.”
Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.
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