The Impact Of A Government Shutdown On Real Estate

Government shutdown
A government shutdown could have some impact on the real estate market.

The end of the fiscal year for the U.S. government is on September 30th. At this point, lawmakers have not come to an agreement on a budget and Congress has not yet approved an extension. Therefore, it is possible that we could see a government shutdown as soon as October 1st. A government shutdown occurs when Congress fails to pass a budget bill or when the president refuses to sign a budget bill into law. This can lead to the closure of many non-essential government agencies and the furloughing or firing of government employees. So what are the options for the government? How would a government shutdown impact real estate? We discuss below.

3 options for a possible government shutdown

  • Budget signed/passed: It is possible that Congress could pass a budget at the last minute and the president signs it. In this case, nothing changes.
  • Congress approves a short-term extension: It is possible that a short-term (i.e. 30-day) extension is approved by Congress. In this scenario, the government would continue operating at its current level while lawmakers continue to work on an agreement.
  • Complete government shutdown: In this scenario, the government could stop funding all agencies except those considered vital to the country’s operation.

Impacts on real estate from a government shutdown

  • Delayed loan processing: The Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) are two of the largest providers of government-backed mortgages. During a government shutdown, these agencies may have limited staffing or be completely closed, which can lead to delays in loan processing. This can be a major inconvenience for home buyers and sellers, and it can even derail real estate transactions altogether.
  • Delayed building permits and inspections: As a result of a government shutdown, it is quite likely that the issuance of building permits and the completion various building inspections would be halted. This would create a bottleneck in demand for all projects.
  • Increased mortgage rates: If a government shutdown lasts for a long period of time, it can lead to an increase in mortgage rates. This is because investors may become more risk averse and demand a higher return on their investment. Higher mortgage rates can make it more difficult for people to afford to buy a home, which can lead to a decrease in demand for housing.
  • Reduced home values: If the shutdown causes a decrease in demand for housing, it can also lead to a decrease in home values. This is because sellers may be forced to lower their prices in order to attract buyers. A decrease in home values can be a major financial setback for homeowners, and it can also make it more difficult for people to sell their homes.


Although a potential government shutdown is outside of our control, it is important to be prepared for all possible outcomes. Here are some tips for buying or selling a home during a shutdown:

  • Be prepared for delays: If you are buying or selling a home during a government shutdown, be prepared for the possibility of delays. This is especially true if you are applying for a government-backed mortgage.
  • Stay in communication with your lender: If you are applying for a mortgage, stay in close communication with your lender. They can keep you updated on the status of your loan and let you know if there are any delays.
  • Have a backup plan: If you are selling your home, have a backup plan in case the sale is delayed due to the government shutdown. This may include having a pre-approved buyer lined up or being prepared to lower your asking price.

Do you have any further questions on how a shutdown could impact your buying or selling of a home? We can help! Contact Natasha at Live South Florida Realty, Inc. today! Of course, be sure to also download our free Florida Home Search app for your smartphone or tablet.

By natasha moore

REALTOR® with Live South Florida Realty, Inc.