(Reuters) – Housing markets in tech hubs are cooling more rapidly than other parts of the United States amid a wave of layoffs in the technology sector and elevated mortgage rates, according to real estate broker Redfin (NASDAQ:RDFN) Corp’s report on Monday.
Decades-high inflation leading to interest rate hikes, weak consumer demand and the possibility of an economic slowdown have forced big tech firms such as Amazon.com Inc (NASDAQ:AMZN) and Meta Platforms Inc (NASDAQ:META) as well as banks to trim their workforce.
Seattle, San Jose, Austin and Phoenix are among metros that have been affected the most as high mortgage rates, turmoil in the tech sector and unavailability of homes deter buyers, the report stated.
Layoffs in the tech industry, concentrated largely in the Bay Area and Seattle have led to some buyers bowing out of their search for a home or cancelling contracts, Shelley Rocha, a Redfin manager, wrote in the report.
The most recent collapse of Silicon Valley Bank earlier this month, from which a lot of Bay Area startup companies borrowed money, is having a mixed impact on the local housing market, the report said.
Redfin agents report that uncertainty around the stability of the banking and tech industries is exacerbating nerves in some buyers and sellers.
The New York metro area is likely to feel the impact of banking turmoil as many of its residents work in the financial sector, according to the report.
“Banking instability could dampen homebuying demand in the area as finance workers worry about their industry,” the report added.
However, the ongoing banking crisis has forced the U.S. Federal Reserve to raise interest rates only modestly this week, bringing mortgage rates down – a temporary relief to some buyers.