How the Government Shutdown Is Affecting the Housing Market

The struggling U.S. housing market is poised to take another hit as the longest government shutdown in US history continues. While 800,000 federal workers and 4 million contractors have already missed their first paycheck, the reaching implications of the shutdown have trickled down into the housing market.

“For ordinary Americans, the shutdown adds to economic uncertainty about their future,” said Lawrence Yun, National Association of Realtors Chief Economist. “Buying a home is a high-anxiety transaction, and by adding another complexity to it with possible delays in [the transaction], it hurts the economy and hurts consumers.”

A recent survey from the National Association of Realtors showed 25% of realtors surveyed experienced a buyer, who was not a federal employee, hold off on purchasing a home due to potential risks of the economy.

“Buying a home is a high-anxiety transaction, and by adding another complexity to it with possible delays in [the transaction], it hurts the economy and hurts consumers.”

The partial shutdown, a result of the impasse over funding for Trump’s wall, has also affected individuals seeking to obtain a housing loan or income verification from the IRS to be approved for a mortgage. While VA loans are not typically affected by government shutdowns, 6% of realtors surveyed reported a delay in closing.

Prospective homebuyers planning to use USDA loans will need to consider alternatives as these will not be processed until the shutdown is resolved. Federal Housing Association (FHA) loans will continue to process however delays are expected as they work through backlog due to a decrease in staff. According to a report by Zillow, 39,000 mortgages may have been affected by FHA delays.

Day 24 of the shutdown draws to an end with no resolution in sight, and the unpredictability of the housing market continues. “It’s a completely unnecessary negative,” said Yun. “If the shutdown quickly ends, then this will not become an issue. If it becomes prolonged, then it will hurt the economy.”

No Comments Yet

Leave a Reply

Your email address will not be published.