Buyer Confidence.
The Government Shutdown is well into it’s 4th week and more than anything else, it has affected Buyer Confidence.
Leading up to the shutdown Buyer Confidence was sluggish, but now it seems Buyers are extra cautious, as many Buyers have even backed out of transactions.
For the first time in several months pending sales have fallen behind the previous year’s numbers. And while, it is not unusual to have fewer real estate transactions in the Fall and Winter months. We’re seeing Buyers who are under contract to purchase, back-out.
This could be for a number of reasons, including, the potential for lower interest rates on the horizon, but by-and-large, Buyer Confidence is waning and the government shutdown is not helping.
Government Services Affected
Outside of Buyer Confidence, the shutdown has impacted several Government services like, HUD, Flood Insurance, and Rural Housing Programs.
The Environmental Protection Agency has or will furlough most of its employees. This will affect many of the regulatory programs like wetland determination and Lead Based Paint disclosure programs.
HUD has a contingency plan that will keep many of the First Time Home Buyer Programs alive through a reduced workforce. They will continue to endorse loans but will suspend programs that require staff input like condominium projects and grant renewal programs.
Fannie Mae & Freddie Mac have continued normal operations as they are not reliant on appropriated funds.
The IRS has not released its shut-down contingency plan but we could see an impact on income verifications for mortgages.
The National Flood Insurance Program will continue to pay policies, but will not sell or renew any policies.
The USDA will not issue new or direct loans.
The VA will continue to guarantee home loans during the shutdown.
The Small Business Administration will not issue or process new loans.
Read more from the National Association of Home Builders.
No End in Sight.
The longer the government shutdown lasts, the more drastic the effects will be. Many Government employees will be furloughed, many benefit programs will be suspended and its likely that millions will be impacted in some way.