Source: The Hill —
A series of layoffs at America’s major technology companies could put pressure on local housing markets amid a broader nationwide cooling.
These layoffs, brought on in part by a series of interest rate hikes from the Federal Reserve and a decline in revenues, could cause forced sales, damage buyer confidence and lead to smaller down payments — even from buyers who remain employed.
“The housing market is fueled by confidence, affordability, and most importantly, jobs. Housing demand in tech-heavy metros is expected to be lower in the near-term,” Ali Wolf, chief economist at Zonda, told to The Hill.
“In some cases, prospective homebuyers will lack both the financial ability to purchase a home and the consumer confidence needed to go through with the purchase,” she said in an email to The Hill.
But some of the most immediate negative housing outcomes could come from damage to the community’s collective psyche as residents see peers lose their jobs.
Over the last month, a host of Big Tech companies have collectively laid off thousands of employees after a period of explosive growth during the coronavirus pandemic.
That growth was spurred by near-zero interest rates from the Federal Reserve and a series of stimulus checks from both the Trump and Biden administrations that allowed for robust consumer spending amid pandemic-related lockdowns.
Now, after a string of large interest rate hikes from the U.S. central bank designed to stanch inflation, revenue is declining, and tech firms like Meta, Twitter and Amazon are responding with cost-cutting layoffs.
These cuts could put pressure on a housing market experiencing a larger downturn after a more than two-year boom marked by sky-high prices and extremely low mortgage rates.