With the volume of mortgages managed through the public sector, it was inevitable that the shutdown would shake the housing market. From Fannie Mae to the Dept. of Veteran’s Affairs, a sizable portion of U.S. home loans come from the government. Granted, the shutdown has been in effect for barely over a week, and most economic unease has come from speculation than hard impact. The stock market has been in a state of unsteady flux that seems motivated more by apprehension than genuine economic danger. Additionally, much of the quivering in the property market seems to emerge from a similar origin.
That being said, a recent report from NPR notes that a prolonged shutdown could have sizable repercussions. As I noted above, the diminished functioning of federal agencies has made processing mortgages and real estate transactions substantially more difficult. The post-recession economy has resulted in a growing backup of pending transactions, whose exist will only spell exponential difficulty the longer the government remains closed. Citing statements released by Moody’s Analytics, the NPR report further details that it could be a matter of days before the impact on the housing market becomes more concrete.
This unexpected stall in home transactions runs directly against the simultaneous rise in prices and interest rates that characterized housing activity last month. The residential property market had already begun to cool, with both rising prices and elevated interest rates rendering new purchases less appealing than they were in prior months. The steady rise in home sales has been one of the primary motivators of growth in the housing market, and the triple threat of higher prices, higher interest, and stalled transactions could spell uneasy sailing through the close of the …read more