Federal employees are going without work in some cases, or working without pay in others, but if you’re looking to buy or sell your home, chances are decent the government shutdown won’t derail your plans.
But if you’re in the market for other federal funding, you may be out of luck.
Real estate experts in Reno and Las Vegas say the shutdown has yet to slow the pace of sales.
The greatest concern among lenders – delays in obtaining tax return income verifications from the Internal Revenue Service – has been resolved, according to a tweet Tuesday morning from the Mortgage Bankers Association.
— Mortgage Bankers Association (@MBAMortgage) January 8, 2019
The exception is furloughed federal employees, says Janet Carpenter, president of the Greater Las Vegas Association of Realtors.
“Furloughed employees must return to work before their income can be used for qualifying purposes,” says Carpenter. “Validation of income processed directly through the Social Security Administration will be disrupted.”
“The National Flood Insurance Program to issue and renew policies will expire with the shutdown,” Carpenter says. “Loans requiring flood insurance will not be able to close without a policy in place. So, in summary, whatever the impact may prove to be, it’s probably not good for the local housing market.”
The other potential obstacle – a delay in tax refunds – appears to have been averted.
The Trump administration is reversing previous policy and allowing refunds to be processed as usual, a relief to the real estate sector.
“A lot of times we see an increase in business because people get a bonus from their tax return and use it toward their down payment,” says Garrett Stewart of Keller Williams, a real estate brokerage in Reno.
Still of concern is the shutdown’s potential effect on consumer confidence, especially in red-hot markets such as Reno, where the median price of a single family home stands at $377,000.
“People are going to hold out and wait for the crash,” says Stewart. “I personally don’t think it will, but consumer confidence plays a big part here in Reno, where we hit a new high a few months ago.”
The median price of a single family home in Reno peaked at $387,000 in July.
“For ordinary Americans, the shutdown adds to economic uncertainty about their future,” Lawrence Yun, chief economist with the National Association of Realtors told Bankrate. “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.”
Is your home buying or selling experience likely to be delayed by the shutdown?
Fannie Mae and Freddie Mac in business
Freddie Mac and Fannie Mae are not funded by the federal government and borrowers should not be affected, as long as income verifications from the IRS, a requirement of the loans, are processed without delay.
FHA and VA
Federal Housing Administration loans may be delayed, though experts say they have not been in past shutdowns. Veterans Administration loans will not be delayed as the VA is funded by lending fees, not the federal government.
Nevada farmers in the market for a loan or in the process of borrowing money from the U.S. Department of Agriculture will have their transactions cancelled and new applications delayed by the shutdown.
For the third time in a year, lenders who guarantee small business loans are putting pending applications on ice. The Small Business Administration’s website says it will not be updated during the shutdown, however, disaster assistance loan processing is available.