NAR: Federal Shutdown Making Some Buyers Nervous
January 9, 2019
For three weeks, a partial government shutdown has left thousands of federal workers without a paycheck. This week, President Donald Trump was quoted as saying in a meeting with top Democrats that the shutdown could stretch on for “months or even years” as he and Congress continue to stall on a spending bill and funding over a border wall.
And as each day the partial shutdown goes on, you could find it costing you more and more in sales. Roughly one-tenth of more than 2,000 respondents to a National Association of REALTORS® survey conducted Monday reported an impact on potential clients. Another one-tenth reported an impact on current clients. Among REALTORS® who reported a business impact since the shutdown began three weeks ago, 25 percent said that they had a buyer who decided to hold off on purchasing a home even though they were not government employees.
In addition, 17 percent of respondents who reported an impact said they have been affected by delayed loans from the U.S. Department of Agriculture, while 13 percent have experienced IRS delays in verifying clients' income information.
“Housing was already on a bit of fragile ground, and now the shutdown is not adding to the strength. It is an unambiguous negative to the real estate market and to the economy,” NAR Chief Economist Lawrence Yun says. “For ordinary Americans, the shutdown adds to economic uncertainty about their future. Buying a home is a high-anxiety transaction, and by adding another complexity to it with possible delays in [the transaction], it hurts the economy and hurts consumers. All the fluctuations that’s going on puts a pause on companies deciding what long-term investments to make.”
“It could begin to shave off GDP [in a measurable way. The touted GDP goal of 3 percent, one may not be able to get that.”
On Tuesday, the Federal Housing Administration urged lenders to be “sensitive to the financial hardships” experienced by borrowers due to the shutdown, particularly those who’ve been furloughed or have had a reduction in income due to it. The FHA called on lenders to work with those affected, such as by extending special forbearance plans or, if necessary, any available loss mitigation options to help them avoid foreclosure. The FHA also “strongly” urged all lenders to waive any late fees and suspend credit reporting on those affected.
Low-income people who rely on government assistance also will be impacted by the shutdown, says Diane Yentel, president of the National Low Income Housing Coalition. “Residents living in HUD-subsidized properties are some of our country’s most vulnerable people—the clear majority are deeply poor seniors, people with disabilities, and families with children,” Yentel says. “They rely on government assistance to remain housed, and a prolonged government shutdown puts them at increased risk of eviction and potentially homelessness.” Members of the Campaign for Housing and Community Development Funding, including the National Low Income Housing Coalition, sent a letter to Congressional leaders this week urging them to consider such an impact the partial shutdown is having on low-income Americans, as well as any individuals who are going without pay.
The latest perspective and information from NAR is included in this video.
“Affordable Housing Leaders Call for End to Government Shutdown,” HousingWire (Jan. 8, 2019) and “FHA Asks Mortgage Industry to Help Unpaid Federal Workers With Their Mortgages,” HousingWire (Jan. 8, 2019)
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Updated: March 20, 2019