Capital Chaos: What Just Happened in D.C.’s Housing Market?

The capital city and its surroundings has much to offer buyers. High-quality public schools. A stable local job market…

At least it was, until mass government job cuts became a thing.

Now, the city is experiencing a seismic shift. Given the changes the city’s going through, is the area attracting new home seekers? What’s going on now? And what’s ahead for this market?

Federal Worker Cuts Are Just Now Being Felt

It’s now well known that metropolitan D.C. has experienced a wave of selling. This summer, 43% of seller agents in the area have worked or are working with clients moving due to federal government cuts, buyouts, and layoffs.

Here’s the rub. A lot of the people heading out of the capital city and surrounds are older, often higher-income homeowners who are accepting buyouts in return for leaving high-salary posts. And this means many of the homes being listed are big and pricey.

Big price tags are the last things sidelined deed seekers need right now. In August, D.C. area market watchers said the median list price was continuing to rise and had hit $575K. That’s up 4.6%, year over year.

So far, 75,000+ federal government employees have taken buyouts. These residents are receiving pay and benefits only through September 2025. Look out, say the market watchers. Here comes a wave of sellers — very big, and very soon.

Here’s a ray of hope. Redfin says starter homes are hitting the D.C. listings services too. Redfin defines them as  $387K homes (median). That’s a small condo in Logan Circle downtown, or a three-BR home in the suburb of Hyattsville.

D.C. Gives Some Buyers a Break

The slowdown in the capital region’s housing market is allowing buyers more time to decide, and more room to negotiate.

Indeed, according to Redfin, some buyers are adding up the costs, looking at the inspection reports, and backing out. A choosy buyer can look at other available homes, as there are hundreds of thousands more homes for sale than takers this summer, per Redfin.

But the number of listings depends on where you look. And it also varies by home type. Here are some generalizations we can draw, thanks to the market watchers’ reporting:

• Washington, D.C. sales are down. Throughout the capital city itself, the median home price is only 2% higher than it was last year.

• Agents are urging sellers to lowball their asking prices in order to keep buyers’ attention.

Within this trend we can see downtown condos, especially, staying on the market longer. On top of this, the federal government has now sent the National Guard to the District. The impact this’ll have on real estate remains to be known. Other unknowns involve an especially high current level of economic uncertainty.

Northern Virginia, Pricey as Ever…For How Long?

Meanwhile, Ryan Price, chief economist for Virginia Realtors, told the WAVY news outlet in Portsmouth, Virginia that listings are staying on the market for about 12 days in Virginia now. The median time was just eight days in 2024. All told, listings are getting easier to find across Virginia — and there aren’t enough buyers for sellers to connect with.

Here again, a big reason for the shortage of bidders could be the cost of what’s offered. The median sale price in Virginia is in the half-million range.

Consider this. In Arlington, Virginia, the typical sale price is up 11% from just a year ago. (Note: When researching the listings, you’ll likely find areas of Arlington north of Route 50, and neighborhoods like Court House and Ballston, looking a little less expensive.)

Alexandria isn’t far behind, with its prices up nearly 8%.

This market is great for those who want big homes in Northern Virginia. Suddenly, buyers are getting closing costs covered, keeping key contingencies in their purchase contracts, and even winning price cuts.

As for the starter-home buyers, financial accessibility is a big issue. We see some younger buyers turning to social media to pair up with housemates and make Arlington or Alexandria affordable today.

Getting In: Tips for Hopeful D.C. Area Home Buyers

Shocked by the prices in Alexandria? You might want to look at Herndon, Chantilly, Leesburg, or Reston. These are budget-friendlier locations. They’re suburban, and you’ll need a car to get around.

You might also look at Maryland, where there are many popular, diverse, and relatively affordable towns, like Hyattsville, Mount Rainier, Takoma Park, Brentwood, and College Park.

Agents urge buyers to plan wisely and early, and not to deplete all their savings on a home — especially at today’s high prices. They also reassure buyers that there’s potential for earning income through renting out homes in this market, if their incomes were to take a hit.

For the aspiring first-timers, the founder of local brokerage Your DMV Team Realty recommends taking some home buyer courses.

A number of real estate companies offer free classes. They share wisdom about interest rates, negotiating with sellers, and local markets. They also explain the basics of heating, plumbing, roofing, and other vital systems in a home. The materials guide learners through each step of the process, and offer clues to assistance with financing. They’re linking hopeful buyers up with area financial assistance initiatives like D.C. Open Doors, the Maryland Mortgage Program, and Virginia Housing.

Finally, watch what’s happening in Montgomery County, Maryland. This county includes Rockville, Silver Spring, Bethesda, Germantown, and Gaithersburg. After bouts of heated arguments, the council has changed the county’s zoning rules. As of November 2025, more duplexes and triplexes can be sited near transportation lines. Developers that offer 3+ units will need to set aside a percentage of their properties as workforce housing.  

Policy moves like this can shift markets, ease inflation, and create more opportunities for people to live in the area.