Layoffs could begin in the coming days, a development with potentially significant consequences for the housing and mortgage outlook
Government shutdowns are an unfortunate, yet not uncommon, occurrence for federal government employees. However, this shutdown could end up much different than previous work stoppages.
During a work stoppage, federal workers deemed non-essential to the government's daily operations are furloughed without pay. However, when Congress passes its budget and the government reopens, workers receive back pay for the time they were off.
However, the Trump administration is threatening to terminate employees, rather than furlough them, as an attempt to drive urgency in the shutdown negotiations with Congressional Democrats. Russell Vought, Office of Management and Budget director, told House Republicans that federal worker firings could begin in one to two days, according to NBC News.
Kristi Hardy (pictured top) is an executive vice president, area manager, and senior loan officer with Atlantic Coast Mortgage. She said she is hopeful that the threat is nothing more than that.
“It's for sure a concern,” Hardy told Mortgage Professional America. “I think it just depends on how long it lasts and if (potential firings) are really a bluff or not. If the jobs do permanently get taken away, then we are going to have some ripple effects in the housing market.”
Fed up with uncertainty
Despite the decline of approximately 300,000 federal workers so far this year, the Washington, DC housing market has remained resilient. However, even a strong housing market would struggle if there were another major increase in unemployment, Hardy said.
“Jobs always drive the housing market,” she said. “If we have a high unemployment rate, it could affect the market for a while. I don't think it's going to be a long-term effect. Ultimately, we are still in somewhat of a housing shortage in the DC metro area. I don't think the housing prices are going to go down. If anything, they may stay flat or barely move up. But I can definitely see people who are planning to buy holding back and not buying because they're afraid for their jobs.”
It's not just Hardy’s clients who feel the impact of government shutdowns. Her husband also works for the federal government, so she knows firsthand how those workers feel.
“Hopefully it's a bluff about people actually getting fired during this time, but it is possible,” Hardy said. “My husband works for the government, and it's tough working under those situations where you're always in fear of losing your job.
“I think that everyone's sick of worrying about it. It's like, ‘If you're going to do it, just do it and rip off the band-aid so we can move on with our lives.’ I think that's the attitude that I'm gathering from other federal employees I've talked to. They’re just fed up with being uncertain.”
Being the voice of calm
One of the most important roles for a mortgage broker is being a trusted advisor in their community. This is an area where Hardy thrives, being able to be the voice of calm in a sea of uncertainty.
“My philosophy is always, stay calm,” she said. “This too shall pass. I think coming from that calm place is so important as mortgage lenders, because we're the leaders. We have to guide and lead, not only our clients, but also our realtor partners and our communities. I always remain calm and remind them that this too shall pass. We will get through it.”
Selma Hepp, chief economist at Cotality, says a government shutdown could trigger recession fears and a flight to Treasuries—potentially pulling mortgage rates lower. But market unpredictability and labor risks make forecasting tougher than ever. https://t.co/hAUAg90yej
— Mortgage Professional America Magazine (@MPAMagazineUS) September 26, 2025
She said it also helps that the DC housing market is still robust. House prices have held steady or continued to rise at a time when they are slumping nationwide. This is reassurance that customers in the market will continue to accrue equity in their homes, which could be critical in a longer shutdown situation.
“Our housing market is very strong,” Hardy said. “It's still the greatest way to build wealth in the United States, and that's not going to change. Ultimately, just having patience, because the DC market is strong. There’s a lot of other industry here. We’re in a strong place, remaining confident and strong-minded will get us through this.”
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