Every new presidential administration brings change to the DC-Metro area, and particularly in Montgomery County, MD, which borders DC. Of particular significance to our area this year is the ongoing downsizing of the federal workforce, which means the firing of thousands of Maryland residents. Given that Montgomery County has one of the highest percentages of federal employees in the nation, these layoffs have the potential to shake up the local real estate market. But what does the data show?
How many federal workers live in Montgomery County, MD?
According to a report by the Congressional Research Service titled “Current Federal Civilian Employment by State and Congressional District,” Maryland had 142,876 federal employees as of March 2024. This was the fourth highest total in the country behind DC (162,144), California (147,487), and Virginia (144,483).
The report also includes employment data by district. Montgomery County is contained within District 8, 6, and 4
By the numbers:
- In Maryland’s District 8, which covers much of Eastern Montgomery County, there were an estimated 59,391 federal employees, or 14.48% of the total workforce in the district.
- In District 6, which includes Western Montgomery County and all of Western Maryland, there were an estimated 34,386 federal employees (8.38% of the total workforce).
- District 4 includes the Burtonsville area of Montgomery County in addition to Eastern Prince George’s County and had 46,978 federal employees (12.29% of the total workforce).
Based on these numbers, I think it’s fair to estimate that Montgomery County alone has 70k+ federal employees.
Maryland as a whole makes up an estimated 7% of the total federal workforce (as of 2024).
Effect of Federal Downsizing on Montgomery County’s workforce
In general, the loss of employment leads to a downward pressure on housing prices. But job losses need to be significant and there needs to be an expectation that they will not be quickly replaced for layoffs to impact home prices.
Here are my thoughts on the current situation:
- Given that federal jobs tend to be regarded as stable, long-term careers, I would guess that federal employees own homes at higher than average rates compared to the general public.
- Given the expectation of job security and predictable opportunities for pay raises, it seems reasonable to assume that a percentage of these employees may have been willing to stretch their budget when it came to purchasing a home, leaving themselves more financially vulnerable in the event of a loss of income.
- Some federal workers who are laid off in our area will be rehired in the private sector at equal or greater salaries and will continue to reside in the area. Similarly, others will be financially stable enough regardless of their employment status.
- However, some former federal workers will take jobs that require them to relocate. Others who were nearing the end of their careers may decide to retire early and move to a low income-tax state. Some may stay in Maryland but will move out of the county to a lower-priced area.
- Certain federal workers in the U.S. on a work visa who are at risk of losing their employment, such as foreign-recruited scientists at NIH, may end up leaving the country.
- A spike in foreclosures and short-sales is unlikely, but may happen in isolated cases.
- These factors will also impact neighboring areas such as Prince George’s County, Fairfax County, Arlington, and Alexandria.
I think it’s a safe bet that the federal layoffs will result in an increase in the number of homes put on the market in Montgomery County this year. Whether it ends up being a meaningful amount or just a drop in the bucket remains to be seen!
Predictions for 2025 Home Values in Montgomery County, MD
Demand for quality housing in Montgomery County and across the greater DMV region has exceeded supply for the past several years, so it would take a major loss of employment and an exodus from the area for home prices to fall.
I personally don't see that as a likely scenario. There is a large population of area residents whose income is not directly tied to the federal government who are seeking quality housing and have been waiting for the past few years for more options to hit the market.
There is also interest from out-of-state investors looking to acquire properties in high-income areas with consistent housing demand.
Additionally, Maryland and the DMV area is relatively stable in terms of climate compared to other areas of the country that are more vulnerable to weather-related disasters (drought, wildfire, flooding, hurricanes, etc), making it an attractive location for those looking for a long-term home.
While these greater trends tell part of the story, the reality from one property to the next could be quite different.
Move-in ready, energy-efficient homes will continue to be in high demand, and those located in coveted school districts, even more so.
On the other hand, there is currently a much smaller market for homes needing major renovations, and if the inventory of move-in ready homes increases, these fixer-upper type properties could see price drops.
I would expect that certain commuter neighborhoods to see slightly more inventory compared to the last 3-4 years, but I don’t by any means expect this to be a “buyer’s market”.
Outlook for Montgomery County, MD Home Sellers in 2025
If you are a homeowner who has plans to sell this year, I don't think you have to worry about home values falling because of the reasons stated above. The important things to focus on for a successful sale are making sure that your home is in good repair, that you set an accurate list price from the start, and that you coordinate your next move if you plan to purchase another home.
If your home does require significant updating, now is a great time to get that work done. Insulating, air-sealing, window replacement, and anything else done to reduce running costs and improve energy efficiency for the lifespan of the home are great selling points these days.
Outlook for Montgomery County, MD Home Buyers in 2025
If you are looking to buy, you may have more options compared to the last few years, and you may not need to move quite as fast when a property in a coveted neighborhood is put on the market. However, it’s still best to submit an offer as soon as you find a property that meets your criteria.
If you are on the hunt for fixer-uppers, unimproved land to build your custom home, or are looking in rural or generally lower-demand areas, this year may be a great time to find deals. Having some flexibility in your timeline will be a great asset.