Thursday, January 3, 2019

How Will the Government Shutdown Impact the Real Estate Market

As of the time this video was recorded, we’ve received a number of questions about how the government shutdown will affect the real estate market. Here’s what you need to know.  

In regard to the government shutdown’s impact on the real estate market, there are three things
you need to think about:

The availability of federal flood insurance. With the shutdown, those services will be affected.
Now, there aren’t many areas in the DMV that are in a floodplain, but there are some, so the shutdown
might hamstring certain settlements that need flood insurance. If you’re buying a house in an area
where flood insurance is important, you need to allow extra time for that due to delays.

Prepare for delays involving anything related to FHA. FHA loans make up around 30% of all the
loans here in the area, and the shutdown will delay and processes related to that loan type. A
settlement that might otherwise take 40 days may now take double that time, depending on the
duration of the shutdown. Realize also that there will always be a backlog, so if you’re thinking of
buying something in the spring or summer and need to use an FHA loan, make sure to start that
process early.

Expect delays on your loan processes. Sometimes when applying for a loan, your lender will ask
for transcripts from the IRS; this will be greatly affected by the shutdown, and you should expect
delays in this process as well. If you’re thinking of selling a home, the process for a buyer could be
extended, so you’ll need to show mercy to buyers offering a good loan and price. If the process would
have taken 35 days otherwise, it could now take them double that time. If you’re a buyer who was
going to allow yourself three months to buy a home, you may need to allow for six months, since we
don’t know how long this shutdown will last or how much it will backlog the process.

Despite all this, I do think now is a phenomenal time to buy or sell a house. Inventory is really low,
and with the combination of the current season and our current economy, I think that buyers out in the
market right now will likely be very serious about purchasing a home.
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