|What Government Shutdowns Mean for the Real Estate Market
The federal government recently reopened following a 35-day partial shutdown, the longest in our nation’s history. Many federal workers worked without pay, relying on promises of backpay once Congress passed legislation that would reopen the government. Others were furloughed through the shutdown.
Major changes in our government’s infrastructure, even temporary ones, have implications on the economy. How exactly does a government shutdown impact the housing market?
The National Association of Realtors conducted a survey of its members to find out exactly what they were seeing when working with clients and other real estate professionals. 75% of realtors reported no impact, but those who did see a change said that it was mostly on the buyer’s side.
9% of agents reported that federal workers looking at a home purchase decided to postpone the purchase during the shutdown. Another 25% of the group that reported an impact said that buyers who did not have a connection to government employment still opted to wait, due to “government uncertainty.”
Other impacts felt were closure of key government offices that led to delays in closing on the new home purchase. The IRS, USDA, and FHA all had furloughed workers or offices that were shut completely during the recent shutdown. This meant that verification of income statements or loan processing through the USDA and FHA loan programs had the potential to be delayed.
The majority of real estate professionals did not see a huge impact on their immediate work due to the shutdown. With the government reopened and federal employees returning to work (with paychecks), it is expected that home buying and selling trends return to normal. With another potential faceoff between lawmakers looming in February, it remains to be seen how chronic shutdowns will impact real estate and the economy as a whole.