As the Department of Government Efficiency (DOGE) works to eliminate thousands of federal jobs and what it considers wasteful government spending, many communities have been taken by surprise. Some supporters assumed the effort would mostly be about "draining the swamp" solely in Washington, D.C. However, the terminations, layoffs and other force reductions are impacting areas throughout the country, not just the nation's capital.

With the national economy showing some signs of slowing, a pivotal question being asked both inside and outside the real estate industry is: How will the cuts in federal jobs and spending impact the D.C. housing market?

DC listing activity remains stable so far

While the future remains uncertain, we do know that, in spite of recent social media reports to the contrary, listing activity in the D.C. area, which is home to more than 395,000 civilian federal workers, has not been significantly affected by cuts in the federal workforce so far. In recent weeks, the amount of inventory has increased; however, this is a typical seasonal trend as spring arrives.

While speculation continues about the impact of changes in the federal workforce on the local housing market, it remains to be seen how these shifts will fully influence demand and market trends. Additionally, as multiple lawsuits challenge the legality of federal worker terminations, and questions arise about the willingness of Congress to cede control of government spending, clarity is unlikely in the near future. That being said, at the Northern Virginia Association of Realtors® (NVAR), we know how to look around the corner to what could be coming to our regional housing market. 

Partnering to gain data-driven insights

For more than a decade, NVAR has supported a collaborative research partnership with the Center for Regional Analysis at George Mason University (GMU-CRA). This collaboration is built around mutual interests in enhancing regional economic competitiveness through efficient and effective housing markets driven by highly qualified and well-informed Realtors®, brokers, mortgage professionals and transaction support teams.

The joint research undertaken by NVAR and GMU-CRA covers a wide range of issues, including economic trends, submarket dynamics, local and state policies, and other pressing topics.

The NVAR/GMU-CRA team provides critical, timely data and analyses to decision makers and industry professionals supporting business planning and enhancing our membership's ability to provide the best services and advice to their clients. 

A more effective approach to forecasting

One of our most closely watched efforts offers an effective approach for assessing rapidly shifting market conditions — the NVAR Regional Housing Market Forecast. Twice each year — once in December and once mid-year — the NVAR/GMU-CRA team forecasts key housing market metrics from our multiple listing service partner, Bright MLS, including price, inventory and sales volume for each of our major jurisdictions.

Our approach begins with a multi-method statistical analysis that models overall patterns in market trends over several years. By combining modeling techniques, we can overcome some of the weaknesses that characterize specific data analytic techniques. Once the initial statistical modeling is complete, the important conversation about the data begins.

That conversation takes place amongst the NVAR/GMU-CRA team and NVAR's Forecast Advisory Group, which is composed of member-leaders who represent the major components of the residential market — Realtors®, brokers, lenders and others with direct, deep knowledge of the region and its housing markets. We participate in a forecasting session that begins with an overview of national and regional economic trends as market context. We then review each market segment by jurisdiction and determine if the statistical forecasts have face validity — a fancy way of saying we have deeply informed discussions to gut-check the estimates.

Refining and sharing the data

The discussion can get nuanced and detailed, and decisions are made to either keep the modeled estimates or adjust them. After the session, the forecast models are modified and sent to each Forecast Advisory Group member for a final review. We have found that when the market is at or entering some type of pivot point, there may be multiple final adjustments needed to reach a consensus forecast. 

NVAR then hosts a recorded panel discussion, where the forecast is released to the public, with media engagement opportunities to address questions.

How is our accuracy? The team has become quite adept at getting the market moves correct, or at least close enough to be an effective planning tool. With the forecast in hand as a baseline, we can monitor current conditions using Bright MLS data to identify and monitor market shifts — like we are seeing in the Washington, D.C., region's federal workforce. 

In addition to providing members with data and insights that help them manage their businesses successfully, we have found this relationship to be productive, and members enjoy being a part of the action.

The takeaway: Collaboration is an effective tool for assessing housing market conditions — whether it is with a university, an MLS or your Realtor association. Give it a try!