The current federal government shutdown is the longest in history and the effects are being felt well beyond the DC region. Today, however, UrbanTurf takes a look at how the area housing market will likely be effected.
While it will be a month or two before we can observe real estate data directly linked to the shutdown, when the government shut down for 17 days in November 2013, the number of home sales in the DC area took a 14 percent dive. For now, the housing impacts of the current shutdown are largely anecdotal.
"The shutdown has already depressed the pace of home sales, although to what degree is still to be determined," Bright MLS vice president Andrew Strauch told UrbanTurf. "I personally know two government workers who have put off purchasing homes as it is still unclear when they will receive their next paycheck."
"This has got to have an impact on the psyche of potential homebuyers,"Lisa Sturtevant of Lisa Sturtevant and Associates told UrbanTurf. "Even when the shutdown comes to a resolution and the market is back to normal, the uncertainty that these shutdowns introduce in peoples' minds will be longer-lasting."
Delaying a home purchase is a minor inconvenience when considering that some affected by the shutdown are worrying about just staying in their homes.
"There's going to be a set of people who aren't going to be able to make their mortgage payments or pay their rent, that are living paycheck to paycheck," Sturtevant said, citing data that estimates almost half of Americans' inability to cover a $400 emergency expense.
If you haven't been affected by the shutdown and are interested in buying a home, don't expect home prices to plummet. (In January, home prices hit their highest level for the month on record.) However, buyers may have more negotiating power in the months ahead.
"There may be sellers with their properties on the market longer than they would [like] due to fewer buyers," Strauch points out. "This will result in homes sitting on the market which sometimes drives sellers to reduce prices."
Ultimately, however, the DC area and the country are in uncharted territory and we can only speculate on the extent of the fallout. "There has never been a shutdown this long, so there is no specific precedent to refer to," Strauch says.
This article originally published at https://dc.urbanturf.com/articles/blog/how-the-federal-government-shutdown-could-impact-the-dc-area-housing-market/14899.
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