LIVE MARKETS-How DOGE's actions could hurt US real estate market

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

HOW DOGE'S ACTIONS COULD HURT US REAL ESTATE MARKET

With the Department of Government Efficiency's (DOGE) efficiency initiatives making headlines, Goldman Sachs estimates how the current measures could hit U.S. commercial and residential real estate markets.

In a note Tuesday, Vinay Viswanathan, structured credit strategist at Goldman Sachs, writes that DOGE's initiatives could largely impact the office market first.

The direct impact of lease terminations by the U.S. Government Services Administration (GSA) is "fairly benign," says Viswanathan.

However, potentially more lease terminations to come and the possibility of outright property sales could drive capitalization rates and vacancy rates higher for some offices with a large floor plate, particularly in the Washington D.C. area.

Viswanathan expects the impact on residential real estate to be much milder by comparison. Assuming, based on Goldman's estimates, that total federal employment could fall by 350,000 over the course of the year, it could raise the unemployment rate in DC metropolitan area, which houses 20% of all federal employees.

"The good news is that across both single-family and multi-family housing, the DC metro has entered this year with tight inventory and low vacancy rates, which should help absorb a hit to demand," writes Viswanathan

As of Tuesday, DOGE's website shows 657 lease terminations, which they say resulted in about $350 million of savings. Media reports last week stated that DOGE has reduced the number of leases it said it had canceled.

(Shashwat Chauhan)

FOR TUESDAY'S EARLIER LIVE MARKETS POSTS:

CONSUMER CONFIDENCE PLUNGES, NEW HOME SALES, HOME PRICES TICK HIGHER - CLICK HERE

U.S. STOCKS EDGE UP; US CONFIDENCE DATA WEAK - CLICK HERE

S&P 500 INDEX VS 200-DMA: MOTH AND FLAME? - CLICK HERE

JAPAN'S VIRTUOUS CIRCLE DRIVING INFLATION HIGHER - CLICK HERE

VALUATION GAPS CLOSING: EUROPEAN BANKS RE-RATING VS US 'OVERDONE' - JPM - CLICK HERE

CTAs SHED $100 BILLION OF STOCKS - CLICK HERE

POSITIVE START ON TARIFF OPTIMISM - CLICK HERE

EUROPE BEFORE THE BELL: STEADY AS SHE GOES - CLICK HERE

RELIEF RALLY STARTS TO FIZZLE - CLICK HERE