The Washington, D.C. metro area, long regarded as a stable market for apartment owners due to the steady demand driven by federal government jobs, now faces uncertainty due to significant cuts in the federal workforce.

With President Donald Trump’s administration and Elon Musk’s Department of Government Efficiency (DOGE) targeting a reduction of at least 101,022 federal workers across the country, multifamily executives are questioning how these layoffs will affect the housing market in the nation's capital. The layoffs are mainly affecting probationary employees, and many of them are currently involved in ongoing litigation.

Though some apartment leaders and real estate investment trust (REIT) executives have yet to notice significant impacts, they remain concerned about the future of the market. Bell Partners' TJ Parker noted, “Based on current information, we believe potentially 100,000 federal government positions may be at risk in the region,” adding that the full effects on multifamily housing are still unclear.

The Washington, D.C. area has been a lucrative market for companies like Equity Residential, which reported 4.2% revenue growth in the fourth quarter of 2024. However, even with these positive results, there are lingering concerns. Equity Residential's Michael Manelis acknowledged, “The wild card here is what impact the new administration and its focus on both cost-cutting and a return-to-office policy for federal employees will have on the local job market.”

Some industry leaders, such as CAPREIT’s CEO Andrew Kadish, are particularly cautious, highlighting the potential negative effects of federal layoffs on apartment occupancies in the D.C. area. "Considering the scope and scale of the layoffs that Musk/Trump have initiated in the past few weeks, CAPREIT is concerned about the short-term impact to apartment occupancies in the D.C. metropolitan area,” Kadish said.

However, Parker suggested that the layoffs could ultimately drive up short-term leases, boosting rental rates, but long-term migration could reduce demand for housing in D.C. as displaced workers seek more affordable areas.

In contrast, some companies, including Elme Communities, have remained optimistic. The company’s CEO, Paul McDermott, pointed out the area's strong performance in 2024 and continued diversification of its economy. “I think now technology has really taken over, and we really are still seeing tremendous amounts of growth, especially in Northern Virginia,” McDermott explained.

REITs like Camden Property Trust have also acknowledged the challenges but remain confident in D.C.'s long-term prospects. CEO Ric Campo noted that while they were considering reducing their D.C. holdings before Trump’s second term, investor demand for apartments in the region remains strong.

As apartment operators and owners navigate this shifting landscape, many are adopting a "wait-and-see" approach. “We just kind of need to see how this plays out over the course of the next couple of months,” Manelis concluded.

Originally reported by Leslie Shaver in Construction Dive.