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Risks to Real Estate Caused by Government Shutdown

The fact that Congress raised the debt ceiling in the early days of the final quarter has left a negative impact on a number of aspects. Although, the number of housing sales may stay balanced, consumer confidence in the market is set to suffer. As a consequence, the path to recovery on which the housing market had been on up till now will receive a temporary interruption.

The forecast of economy and housing for the month of October is going mainly undisturbed as compared to previous forecasts. The levels of investments from consumers were observed to be modest by the end of the third quarter, however, associating with the shutdown by the Congress were fiscal uncertainties which got prolonged despite talks to raise the debt ceiling. This also protracted the timing of tapering of the asset purchase program which was offered by the Federal Reserve. This showed considerable liabilities hike to economic matters in the current quarter. But recent slips in future interest rates are expected to aid the housing market.

In over a six months time period, existing homes sales spiked up to their highest number. This depicted the fact there was a significant rush to buy before the mortgage rates could rise further. Elsewhere, another category which is enjoying a high recovery is the homebuilder. Despite mortgage rates being raised even further, the buyer traffic is gaining confidence. Therefore, incoming housing indicators are overall staying positive.

The shutdown gave the mortgage market a small hike while lasting almost a month. The Federal Housing Administration did not stop providing its services while continuing to process new loans throughout the period, even though the staff got lucky in numbers. New and independent loans were also continued to be endorsed by lenders having delegated authority which has now relieved the burden off of the FHA as they can easily catch up.

However, the future still remains dark as the shutdown is likely to leave housing activity with a considerable impact, causing the pace of FHA endorsements to dwindle. Elsewhere, people of the industry might go through hurdles in the processing stages or experience caution amid uncertainty. While the delaying drive in economic activity between the second and third quarter, combined with the fiscal events’ outcome is predicted to downgrade the market. The annual growth will suffer a drop coming in at 1.9 percent.


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