Can Big Tech Layoffs Impact The Housing Market?
In recent months, tens of thousands of tech workers in positions that were previously considered to be secure and well-paying have been forced to move on, which might put strain on local communities that are already under pressure from the general housing market.
What Happened: The layoffs, which were prompted in part by the Federal Reserve raising interest rates repeatedly and a drop in revenue, could result in forced sales, harm consumer confidence, and reduced down payments, even from buyers who are still working.
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“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,” said Ali Wolf, chief economist at Zonda housing market research.
According to Wolf, some of the most immediate adverse housing consequences may result from psychological harm to the neighborhood as residents see friends and neighbors lose their employment.
Mega-companies like Meta, Amazon, and Twitter have been cutting jobs, which could put pressure on the housing market, which is already facing a greater fall following a more than two-year boom characterized by sky-high prices and extraordinarily low mortgage rates.
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Why It Matters: Mortgage rates are starting to decline after months of historic increase, which was sparked by a Labor Department report that showed inflation was less severe than anticipated. The 30-year fixed mortgage rate saw its biggest weekly drop in more than four decades, falling to 6.81%.
The number of homes under contract nationally has reached a historic low, but the persistently high rates are also contributing to the over 60,000 purchases that fell through in October.
Even Silicon Valley hubs like San Francisco and San Jose saw a rise in cancelled property sales last month, with 6% and 8% of sales failing to materialize, respectively.
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