(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. 

Mortgage rates are beginning to drop after months of historic growth, which put the 30-year rate above 7 percent. And last week, after a report from the Labor Department showed softer-than-expected inflation, the 30-year fixed mortgage rate experienced its largest single-week decrease in more than four decades, falling to 6.61 percent. 

Still, the lingering high rates are bringing the number of homes under contract nationwide to record lows, and nearly 60,000 deals fell through in October. Even Silicon Valley cities like San Francisco and San Jose experienced increased home sale cancellations last month, with 6 percent and 8 percent of sales falling through respectively. 

However, the number of cancellations in these cities are still the lowest among major U.S. metros. 

“The Fed’s actions to curb inflation are causing the housing market to slow at a pace not seen since the financial crisis,” Redfin economics research lead Chen Zhao said in a media release this week. 

“There are already early but promising signs that inflation is cooling, which caused mortgage rates to drop last week. If that progress continues, buyers who recently backed out of deals may return to the market and sellers may be less inclined to slash their prices.” 

Data also shows month-to-month home price declines nationwide. In October, prices dropped by 1.4 percent. But they are still up 4.9 percent from last year, with the median priced home selling for $397,549. 

San Jose and San Francisco are among five U.S. metros that have already experienced year-over-year price declines. Prices fell by 4.5 percent from last year in San Francisco and by 1.6 percent in San Jose. 

However, these two metro areas are still among the priciest in the country. The median price for homes sold in San Francisco in September was more than $1.4 million, while the median sale price for a home sold in San Jose last month was around $1.2 million. 

As the market trends downward, experts say there could be added strain on the local economies dealing with layoffs, though their real impact on the housing market could be difficult to measure. 

“At a high level, there’s reason to suspect tech layoffs will put some downward pressure on prices in both the for-sale and rental markets,” Rob Warnock, a senior research associate with Apartment List, told The Hill in an email. 

“This is intuitive — unemployment and job uncertainty typically encourage people to spend less on housing, and as the tech industry feels more strapped for cash, there will be fewer IPOs that unlock the capital that some employees rely on for down payments,” Warnock added. 

Warnock cautioned that it may be difficult to evaluate the actual impact of these layoffs amid broader economic trends. These include an annual seasonal slowdown in the housing market and a “high-interest rate economy that discourages people from moving regardless of their industry or employment status.” 

Yet these layoffs add pressure on both buyers and sellers and could even force both to make choices based more on time rather than price, according to Wolf. 

“Layoffs can sometimes result in a forced sale, one where the owner needs to move for financial reasons versus personal. Homeowners that are motivated to sell may be less price-driven and more time-driven,” Wolf said. 

“This means the sellers may be willing to price their home more competitively to just ensure a sale, even if that means below recent comps,” she added. 

Redfin deputy chief economist Taylor Marr told The Hill that other economic factors might outweigh the real impact of tech company layoffs. 

“There are a lot of other factors also at play here — namely that the Nasdaq is still in a bear market 2023 and this is hurting these local economies and housing markets more — already Seattle and SF home values declined 9 percent between May and August — according to Case Shiller — and are expected to have fallen further since then,” Marr said. 

But he said it is important to note the psychological impact. 

“The psychological feedback loops are more noteworthy and pervasive as simply having close ties with someone laid off or at a company making big cuts or even a nanny who worked for a tech worker and was also laid off are more impactful to the psyche in these markets,” Marr said.