With 800,000 government employees having to show up at work without a paycheck or being furloughed; the impact on real estate has begun with mortgages becoming unavailable through the Federal Housing Authority or the United States Dept of Agriculture, which are not endorsing new loans for multifamily properties and landlords of public housing, according to Mark Zandi of Moody Analytics.
The short and longer-term effects on federal workers who begin to miss loan payments and the lack of money to purchase daily needs are and will have greater financial and psychological effects that may grow as the shut down continues going forward without an end in sight. However, the one positive that has been a by-product of the slowdown is that mortgage rates have ticked down, making purchasing a little more affordable for those who are in the market, searching for a home.
However, “All the fluctuations and uncertainty that is going on puts a pause on companies deciding what long-term investments to make,” Lawrence Yun, a chief economist at the National Association of Realtors, said. “Do they actively purchase a commercial property knowing there could be further disruption in the future? They could be more hesitant or go on a more [smaller] scale.”
During the shutdown, the USDA is not issuing new rural loans or closing on direct loans, according to NAR. The United States Department of Housing and Urban Development is still closing on single-family loans during the shutdown, but the agency could be stretched thin as many staffers are furloughed, Yun said.
“All those things should occur but with a shortage of staffing you are spreading out people and you can make it much more difficult,” he said.
Even those not relying on federal loans for home purchases, can get their closings
delayed by the shutdown if they need a new social security number from the Social Security Administration or tax returns from the Internal Revenue Services since both agencies are operating with short staff, Zandi said.
For larger property owners, HUD is not endorsing new loans for its multifamily program and loans to owners of public housing projects could be impacted as resources as stretched thin, said Heidi Learner, the chief economist at Savills Studley.
“Anyone who depends on FHA loans for either new mortgages of refinances are going to be put on hold,” she said. “Some loans to public housing and housing agencies across the country could potentially be delayed.”
As of Jan. 12, only 337 out of 8,709 managers and staffers of H.U.D. (U.S. Housing and Urban Development) which runs the F.H.A. were on the job!
Broadly speaking, a long shutdown could impact the overall economy of the country —which experts previously told Commercial Observer could slow investment sales and multi-million dollar condo unit buys — and impact consumer confidence to buy durable goods like cars and jewelry, according to Yun. In addition, the effects are trickling down to investment sales of multi-million dollar condo unit purchases.
Vendors and local stores who depend on federal workers on a daily basis, are slowly being critically impacted by the furloughs and lack of remuneration to federal workers, who have to be able to prioritize what to do without, in their daily struggle to make ends meet! What will it be, food, car and insurance payments, gas, mortgage payments, etc. Our GDP (Gross Domestic Product) predicted to be about 3 percent, will be reduced as the shutdown weighs on people and our economy. More and more federal workers are calling in absent and at the same time many are likely looking for some kind of work (available jobs are so challenging to find (with the lowest unemployment rate in 50 years) to earn money daily to stay above water.
No one thought or imagined that this would be the longest government shutdown in history and have such an effect on its’ federal workers, who through who no fault of their own, are being used as scapegoats for a wall (that remember, Mexico was suppose to pay for in the beginning, right?)
Why bring our economy down and at the same time, affect federal workers who have nothing to do with whether the wall gets built or not, have their lives be severely and adversely impacted, just because our political system allows it to be controlled by one individual and neither party seems to be able to sit down like adults to hash things out in a pragmatic and logical fashion.
Our government has really stopped working for us; who have been hired (elected by us); but are only concerned with their personal self-interests, who will be the winners and losers and egos. It should always be about us, not about them and their personal whims and winning, when we are all losing!
Philp A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 Great Neck. He has earned designations as a Graduate of the Realtor Institute and a Certified International Property Specialist. Receive regular “free” updates of sold homes in your area and what your home would sell for in today’s market or search on: WWW.Li-RealEstate.Com He can be reached by email, at: Phil@TurnKeyRealEstate.Com, or by cell: (516) 647-4289.