Government Shutdown and What it Means for the Housing Market
As of the first of October the government is shutdown until further notice, mainly because they can’t get a budget passed. While this is disconcerting on many fronts, it is particularly scary for the still recovering housing market. If the shut down continues for a lengthy period of time the market could see some serious declines.
The shut down affects mortgages from several aspects the first is special government backed loans. These make up about 1/4 of all loans and include things like FHA, Veteran loans, and Agriculture loans. The staff used to approve these types of loans has been reduced by almost 98%. This means processing times will significantly increase and certain types of loans will not be processed at all.
Staffing issues also plays a huge part when it comes to social security and tax record verification. With the IRS closed lenders cannot verify social security numbers or tax records which makes it impossible to close a home sale. This also means that it’s likely lenders will not even accept applications until the shut down is resolved. In the short term this stall is unlikely to affect much besides annoy home buyers and sellers.
As the shut down drones on mortgage rates will likely continue to decline as they closely follow economic trends. Normally, this should make housing more affordable and even increase housing market activity. However, due to economic uncertainty and the above mortgage processing issues the market could remain flat or even decline.
Seeing these items broadly affect the market as a whole is unlikely, but if the shutdown continues past a few weeks it will most certainly come into play. With issues outside of the budget, like the ever looming debt ceiling, there are certainly more economic woes to come post shut down. Currently most consumers and real estate professionals are optimistic and fingers crossed for a quick resolution to the shutdown and all the craziness going on in Washington.
If you have issues selling your house during these trying times and want a cash offer contact US Home Assist.