Effects of Government Shutdown on the Real Estate Market

by on Foreclosures

If your turn on the news this morning the first thing you are likely to see are the threats of a government shutdown. Congress is having a very difficult time reaching an agreement on the budget, which raises the potential for a government shutdown in the near future. The inability to reach a conclusion is yet again the result of Democrats vs. Republicans, in the all too familiar bi-partisan battle.

A government shutdown can put many of the over 4 million federal workers temporarily without their jobs, while also decreasing the likelihood that the IRS would provide tax refunds during the shutdown. However, the overall effects of the government shutdown on most markets, including the real estate market, are probably minimal at best.

Although a government shutdown could produce complications and delays for those seeking to secure home loans through federally backed lenders such as Fannie Mae and Freddie Mac, it is likely to have very little effect on existing mortgages. Furthermore, the government shutdown is likely to be very short-lived, if it occurs at all. Therefore, there is little to fear about the government shutdown in relation to everyday living.

As with previous government shutdowns, like in the mid-1990s, most things in the country will continue as usual without skipping a beat in the process. Hopefully Obama, Republicans, and Democrats can pull together and quickly reach an agreement that removes the threat of a government shutdown. However, if a shutdown does occur, there is not much of a threat directly to the real estate market or those seeking to secure home loans—outside of a possibility of minor delays.

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