The Invisible Recession Hitting High-Income Workers Is Now Dragging on Housing

Most major metros are adding jobs more slowly than normal, and the slowdown is hitting the workers who drive homebuying activity the most: those in tech, professional services, and finance, according to a new report from John Burns Research & Consulting. 

The shift has major implications for the housing market, because high-income earners are far more likely to afford today’s housing prices.

“When high-income sectors contract, you’re removing the workers most likely to qualify for mortgages in today’s market,” explains John Macke, the report’s author. “Mortgage qualification is fundamentally about income thresholds—and with current home prices and mortgage rates elevated, those thresholds have risen significantly compared to just a few years ago.”

As high-income sectors shed jobs, most of the remaining growth is coming from lower-wage fields like education and health care. This tilt reshapes demand toward renting rather than buying, even without a broader economic downturn.

It’s an unusual pattern: The economy isn’t losing jobs overall, but the workers losing jobs are the ones who matter most to housing.

Why high income jobs matter for housing demand

To understand why high-income earners are so important to sustain for sale-demand, consider this: A household now needs nearly $120,000 of income to afford a median priced home. Yet nationally, the typical household earns roughly 46% less.

That gap leaves only high-income workers with the flexibility to buy, which is why Macke says losses in these industries matter so much.

“The jobs being lost in sectors like technology and professional services typically pay above what's required to qualify for a mortgage at today's median home prices in many markets,” he explains. “These job losses directly shrink the pool of qualified buyers and limit homebuying activity.”

And a lack of a qualified buyer pool can impact home prices, says Joel Berner, senior economist at Realtor.com®. 

“A decline in high end employment will likely lead to softness in the for-sale housing market, as evidenced by low or negative price growth,” he says.

In other words, the job market doesn’t need to shrink overall for the housing market to cool, it only needs to lose the wrong kinds of jobs.

The coolest markets have slowing job markets

Realtor.com identified 11 metros that have tipped into buyer's markets. Of those, each one overlaps with a metro experiencing slowing job growth, as outlined by JBREC's report, with the exception of New York City, which remains in buyer's market territory despite having strong job growth overall.

Austin, TX, is the most visible example. The metro’s rental market has softened dramatically, with median asking rents down 7.2% year over year, and its for-sale side is cooling as well, with listing prices falling 5.7%, according to data from Realtor.com.

The combination of a tech hiring slowdown and a construction boom has created a double shock: weakening demand at the same moment supply is hitting the market. As Berner notes, weaker high-income hiring “pulls down demand for homes,” and when new construction keeps adding inventory, both prices and rents adjust quickly.

Denver shows a similar dynamic, though less severe. Median rents are down 5.9%, and listing prices have slipped 1.6%. The metro now has some of the largest inventory gains in the country compared with pre-pandemic levels, and without strong professional-services or tech hiring to absorb it, that supply is now pressing against prices.

In the Bay Area, the story is more nuanced but still points to cooling on the for-sale side. 

San Francisco’s rents are up 1.6% year over year and San Jose’s are up 2.2%, but listing prices are falling in both metros—down 4.0% in San Francisco and 0.9% in San Jose. High-income renters are still willing to pay top dollar, but buyer demand has softened enough to pull prices down, which Berner attributes to “general economic softness” tied to tech layoffs.

The ‘rare bright spot’

After years of whiplash from pandemic-era trends, it can sometimes be hard to pinpoint what’s truly driving today’s housing market. But when it comes to understanding how high-income job gains—or losses—flow into the housing market, Charlotte, NC, stands out as a clear case study.

The Queen City is one of the few large metros that has maintained strong growth in high-earning industries, leading Macke to identify it as a “rare bright spot” for for-sale demand, even as the broader market flashes signals that would typically be associated with cooling.

In October, active listings in Charlotte surged 36.5% year over year, the second-largest increase in the nation behind Washington, DC. That inventory jump would typically signal a market under pressure, but Charlotte is behaving differently. Despite more supply, prices are still rising.

Charlotte’s median list price rose 2.1% year over year, one of the stronger readings in the South, and far above the declines seen in Austin (-5.7%) or Denver (-1.6%). Homes are sitting longer (7 more days than last year), but the slowdown is mild compared with markets like Denver (+11 days) or Miami (+13 days), and roughly on trend with the region as a whole.

Why the resilience? According to Macke, Charlotte’s strength “really comes down to job composition and migration patterns.” 

“Charlotte is still adding professional services jobs at a robust pace,” he notes, while markets like Austin and Denver are losing employment in the exact job categories that drive homebuying activity.

It's the counterexample that proves the rule: When high-paying industries grow, buyer demand holds, even when supply rises.

What this means for the housing market

As job growth tilts more heavily toward lower-paying industries, the balance of housing demand is shifting, with more households forming on the rental side than the for-sale one.

Macke says this is what the current job mix tends to produce.

“On the rental side, despite record apartment and build-to-rent (BTR) deliveries adding new supply in many markets, rental absorption has remained relatively strong because rental households now drive the majority of household growth,” he says.

The latest rental data from Realtor.com reflects that shift. 

October marked the 27th consecutive month of monthly rent declines, yet renter interest hasn’t collapsed. Even with median asking rent down 1.7% year over year, rents are still up almost 17% compared with six years ago. And in high-demand markets, like New York City, rents continue to grow year over year.

That steady demand is a signature of a market shaped by job recomposition: More renters are being created because the jobs that are growing pay renter wages, not buyer wages.

The invisible recession showing up in housing

For years, the affordability crisis has forced the for-sale market to rely on a narrow slice of high earners and equity-rich buyers. Now, as those buyers come under pressure, the housing market is starting to feel it too.

The cooling taking shape isn’t tied to a traditional, broad recession, though. It’s tied to who is losing jobs, and how their absence reshapes the buying pool.

Early sirens are already flashing. Recent reports show layoffs accelerating into recession territory, with tech bearing the brunt. AI stocks have also swung sharply, amplifying fears of a sector-wide pullback—exactly the kind of turbulence that hits high earners first.

Macke says these shifts usually surface in local news before they ever appear in federal data.

“The most telling signals are layoff announcements at major local employers, especially in higher-income sectors like technology, professional services, and finance,” he says. ”These directly impact the buyer pool since workers in these industries are most likely to qualify for mortgages at current price levels.”

If those high-income cuts continue, the housing market may keep cooling—not because the broader economy is contracting, but because the buyers who prop it up are.