Delays and disruptions for homebuyers and sellers

• FHA, VA, and USDA loans: Processing and closing for government-backed loans through the Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) can slow down due to limited staffing. The Department of Agriculture (USDA) typically stops issuing new rural housing loans and guarantees entirely.
• Flood insurance: The National Flood Insurance Program (NFIP) cannot issue new policies or renewals during a lapse in funding. This can put sales in flood-prone areas on hold, potentially affecting thousands of property transactions each day.
• Verification delays: Delays in income and tax transcript verification from the Internal Revenue Service (IRS) and the Social Security Administration can create bottlenecks for conventional mortgage applications. 

Impacts on the broader housing market

• Lack of economic data: Federal agencies like the Bureau of Labor Statistics and the Census Bureau stop releasing scheduled reports on inflation, employment, construction, and housing starts. This data blackout makes it difficult for investors and policymakers to accurately assess the economy and real estate market, fueling uncertainty.
• Federal employee income disruption: Furloughed government workers and federal contractors may face temporary or permanent loss of income, forcing them to postpone home purchases. This impact is most pronounced in areas with a high concentration of federal employees, such as Washington D.C..
• Mortgage rate volatility: The market reacts to economic uncertainty by seeking safer investments like Treasury bonds, which can initially drive yields and mortgage rates lower. However, the data blackout makes it harder to predict long-term rate movements, and rates could fluctuate dramatically when data releases resume.
• Housing assistance disruptions: Renters relying on federal aid through the Department of Housing and Urban Development (HUD) may experience delays in payments. A prolonged shutdown could put affordable housing projects and developments at risk. 

Effects on commercial real estate

• Diminished investor confidence: Market instability and delayed economic data can cause commercial investors to pull back, tightening credit conditions and delaying real estate deals.
• Delayed development projects: Permits and other government approvals needed for development projects can be put on hold.
• Impact on federal tenants: The federal commercial real estate market can be hit hard by stalled transactions, delayed lease agreements, and maintenance issues for properties leased by the government. 

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