Mark Berookim did not write this blog post and the content within this article do not express his views on the topic.
After the recent U.S. government shutdown, individuals looking to buy or sell a home are wondering what will happen to the real estate market if a budget agreement cannot be reached before the current continuing resolution expires on February 9th, forcing the government to shut down yet again.
A government shutdown will not prevent banks and private mortgage lenders from conducting business. Even Freddie Mac and Fannie Mae, which are government-sponsored, would not be affected. The process of getting approved for a mortgage, however, may be delayed. This is because lenders rely on tax and other information from the Internal Revenue Service and the Social Security Administration, which would have to furlough large numbers of employees for the duration of the shutdown. Borrowers applying for mortgages through the Federal Housing Administration or the Department of Veterans Affairs would also see significant delays. The activities of the Department of Housing and Urban Development, which oversees housing for low-income individuals and enforces the Fair Housing Act, would also come to a halt.
While a government shutdown may be an inconvenience to borrowers and sellers, the National Association of Realtors and economists with Redfin do not believe that a relatively short government shutdown will have any long-term impact on the housing market. They point to the fact that even though sales numbers declined modestly during the 2013 government shutdown, they did start to rebound quickly once the government reopened.
We will have to wait to see the extent of the influence the government shutdown will have in the long run on the real estate housing market.