Reply to Is there going to be panic selling?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]The largest employer in DC is restructuring to cut the workforce by half. The largest employer is also the largest leaseholder and also announced giving up millions of square feet of commercial space. 
Idk if people just have their heads in the sand because they’re used to stability in this sector or if this is some form of hyper normalization to keep things steady - but I can’t fathom how wholesale RIFs and closures doesn’t hurt the DC market. 
There is no other industry in this market to take the place of gov. Even GSK / pharma /life sci - which MoCo has hung their hats on - has waned and announced departures. [/quote]

The issue is that for years people have said DC real estate can never drop and that it’s not like other locations.

Except black swan events do occur.  The fires in Pacific Palisades, 9/11 and now, a huge reduction in the federal workforce.  No place is immune and diversification is important. Whenever someone tells you that something can never be affected you should question it.

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Who said prices would never drop and that DC is insulated?  Prices did slump in DC metro during every recession.  In DC proper markets are very local and dependent on what's around.  Some areas just stagnated, while others went up 2x in price.   And I think comparing this situation to natural disasters that wipe out entire towns is weird and it's not something anyone can predict or be shielded from regardless where they live.[/quote]

Actually, I think it’s the opposite. Most of these natural disasters are predictable. State Farm dropped a lot of customers in the Palisades last year because that area is really high risk. (An aside: If CA let State Farm charge as much as they needed to charge to remain profitable they wouldn’t have dropped people, but they would have charged a lot more). Trump decimating commercial real estate and the fed workforce in the DMV is the real black swan event. It’s unprecedented historically, probably because it’s a really bad idea. The DMV was one of the most resilient markets during the Great Recession because of the federal government. What some of us are saying is that if this goes the way Trump and Musk are telegraphing the reorg won’t happen. The jobs are gone and the jobs of the contractors who supported many of the fed initiatives are also gone. Then the bakeries, the hairdressers, the therapists, the preschools, the dance studios, the gyms that all depend in one way or another on the fed/contractor spend are impacted. I hope in four years the administration changes and all the jobs come back (if they are lost), but most people can’t wait four years to get a new job and the job market will likely be saturated if the worst case scenario occurs. Is it reasonable to expect in four years that a democratic administration will go on a fed hiring spree? To some degree, yes. Also, what is the likely impact of the commercial real estate market semi-collapsing on the residential market? Blight? What is the impact on the loss of income tax revenue and corporate tax revenue on state budgets? Do the states raise taxes? How would that interact with the residential and commercial real estate markets? [/quote]

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