Government shutdown sends ripples throughout real estate

Real estate may feel the effects of the partial government shutdown.

The government shutdown, although only a partial stoppage, has made its presence known across many different industries.

One of those has been real estate, and a number of segments depend on the government to speed the process along. At the moment, each and every transaction may run into speed bumps due to the impasse in Washington, D.C.

FHA remains in operation
One concern when the government shutdown began was the status of the Federal Housing Administration. Many financial regulators and other government organizations are closed or operating with a skeleton crew. However, the FHA was one that remained operational despite a smaller staff and is continuing to process loan applications throughout the government shutdown.

Real estate agents may see their business change as more people wait out the shutdown before making any commitments. Borrowers do have the option to get insured by private mortgage insurers, although not everyone who qualifies for an FHA-backed loan is eligible, according to Inman News. 

Out of the FHA's typical 2,972 workers, only 68 will work through the shutdown, the news source noted. That could mean the process will be slower than usual, which might have a rippling effect all the way back toward real estate agents and their clients.

For example, FHA-backed borrowers may see their offer turned away during a bidding war, if the government shutdown impedes their chances of closing on time. Sellers could instead choose a person who can complete the needed paperwork in a timely fashion.

Courthouse Retrieval System can provide detailed information, like property data and mortgage records, for Realtors and other professionals. With this level of knowledge, real estate agents can best advise their clients during any negotiation.

New mortgages take a hit from shutdown
Even as financial regulators and others in Washington, D.C. await the end of the government shutdown, many homebuyers and sellers need to move along with their transactions. 

That could make life more difficult for real estate agents, and mortgage rates might also change as the impasse continues. In fact, the housing recovery as a whole could take a hit from the current situation, according to

"Watching the markets, mortgage rates did waver a little but we didn't see massive movement some expected," David Hall, president of Michigan-based Shore Mortgage, told the news source. "This shutdown does come at an especially bad time as new home sales and home construction are building back up. More uncertainty is not what we need."

Lenders could also have a difficult time accessing tax documents from potential borrowers as a means to verify income, the news source noted. That could be one of several things that gets in the way of the real estate industry operating at a normal level. 

In addition, mortgage rates may drop lower as a result. If the economy eventually takes a hit and consumer sentiment drops because of the shutdown, banks and lenders may lower rates to bring in more borrowers, explained. Any changes could impact real estate, and affect how each agent and their clients do business.

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