With the recent federal government shutdown and the potential for an additional shutdown in the near future, many home buyers and sellers are wondering how a government shutdown could impact the Washington DC real estate market.
A large portion of the population in DC and the surrounding suburbs have a job tied to the federal government so this question does make sense, however, a closer examination reveals the impact will be minimal or negligible. Many buyers in the area now have some unexpected time off from work, so getting out to see homes is a lot easier for many people in the market.
The Mortgage Industry
According to Forbes, the federal government and its affiliates underwrite, insure or own 90% of the mortgages. However, most of the federal loans programs have funding streams not connected to the shutdown.
Fannie Mae and Freddie Mac insure the overwhelming majority of loans in the US and their operations are paid for by fees from lenders so these programs should be minimally impacted. Funding for VA and FHA loans will continue as well.
The one impact that could happen with these programs is that if the shutdown is prolonged, VA and FHA loan processing times could increase. The one government program that will be impacted is the rural development program run by the Department of Agriculture, which will stop issuing loans. This program, however, is not a player in the DC real estate market. For most potential borrowers there will be no impact.
The Bottom Line
While the constant news cycle might make the shutdown feel scary, the impact on the local real estate market will most likely be negligible, unless a government shutdown lasts for months and causes a major drag on the economy.
If anyone you know needs to buy or sell a home in the DMV, contact The Orange Line Living Team today at (571) 969-7653!