Will the Government Shutdown affect the local real estate market? (Washington: tax lien, sales)

[Abraham Walker]

At first, I thought the government shutdown was going to be over in a few days. After today's news cycle, it looks like this may last longer than everyone anticipated.

How long do you think people can hold out before making some tough decisions?

Northern Virginia is already expensive with continuous paychecks.

[ersatz]

Take a look back at the year-end shutdown of 1995/1996, the longest time we had a shutdown. This one will likely be longer. At least this is currently taking place at the traditionally slowest time in the annual real estate market.

https://www.coakleyrealty.com/govern...ousing-market/

[ChristineVA]

I've heard that closings will slow down as the work on federally backed loans stops. Also heard that checks on income through IRS (if needed) won't be happening.

[Piney Creek]

Although the shutdown may have some affect, I was more concerned that rising mortgage rates would hurt the market. But the rates are dropping, which may counter balance any affect of the shutdown (especially if it ends up getting resolved, or they switch to military funding). I think it's reasonable to expect home sales (and maybe closings) will take longer, esecially for people listing in January.

In the past week:

• The 15-year fixed-rate mortgage fell to 4.11 percent from 4.13 percent.
• The 5/1 adjustable-rate mortgage fell to 4.26 percent from 4.31 percent.
• The 30-year fixed-rate jumbo mortgage fell to 4.55 percent from 4.63 percent.

https://www.bankrate.com/mortgages/analysis/

[Abraham Walker]

Originally Posted by ersatz

Take a look back at the year-end shutdown of 1995/1996, the longest time we had a shutdown. This one will likely be longer. At least this is currently taking place at the traditionally slowest time in the annual real estate market.

https://www.coakleyrealty.com/govern...ousing-market/

Thanks for sharing this article. It leads me to a few posts on Forbes.com that give more information about the Government shutdown's impact on the general real estate market.

Shutdown Of IRS & Other Government Agencies Is Causing Headaches For Homebuyers And Lenders

The main two ways the shutdown will impact the market involves:

1. Buyer's will have a challenge verifying their income without using IRS tax returns.
2. Title companies will have a challenge providing free and clear title without verifying sellers tax liens.

Originally Posted by ChristineVA

I've heard that closings will slow down as the work on federally backed loans stops. Also heard that checks on income through IRS (if needed) won't be happening.

15%+ of transactions in Northern Virginia were VA/FHA sales. Most of these transactions are in the lower half of the prices and could impact the move up real estate market.

Originally Posted by Piney Creek

Although the shutdown may have some affect, I was more concerned that rising mortgage rates would hurt the market. But the rates are dropping, which may counter balance any affect of the shutdown (especially if it ends up getting resolved, or they switch to military funding). I think it's reasonable to expect home sales (and maybe closings) will take longer, esecially for people listing in January.

In the past week:

• The 15-year fixed-rate mortgage fell to 4.11 percent from 4.13 percent.
• The 5/1 adjustable-rate mortgage fell to 4.26 percent from 4.31 percent.
• The 30-year fixed-rate jumbo mortgage fell to 4.55 percent from 4.63 percent.

https://www.bankrate.com/mortgages/analysis/

Good points. Hopefully, the stock market stays strong while we go through this temporary shut down.

What's the likelihood of them switching to military funding?

[ersatz]

Originally Posted by Abraham Walker

What's the likelihood of them switching to military funding?

Who switching to military funding?

Agencies and the President can't reallocate funding authorized by Congress from one designated purpose to another, it's wholly illegal.

But, if President Trump were to declare a National Emergency and assume emergency powers, current law and the Constitution are not clear on how that works or what limits to such powers apply, if any. Perhaps the shutdown is engineered and intended to facilitate that. However, that is an entirely different conversation that belongs in the Politics forum.

[Abraham Walker]

Originally Posted by ersatz

Who switching to military funding?

I don't know. That's why I was asking the follow-up question.

Originally Posted by ersatz

Agencies and the President can't reallocate funding authorized by Congress from one designated purpose to another, it's wholly illegal.

But, if President Trump were to declare a National Emergency and assume emergency powers, current law and the Constitution are not clear on how that works or what limits to such powers apply, if any. Perhaps the shutdown is engineered and intended to facilitate that.

Seems plausible. This administration is showing us the full extent of the executive branch's power.

Originally Posted by ersatz

However, that is an entirely different conversation that belongs in the Politics forum.

My goal was not to make this into a political forum. I was simply asking a follow-up question to one of the replies.

[Piney Creek]

Originally Posted by Abraham Walker

The main two ways the shutdown will impact the market involves:

1. Buyer's will have a challenge verifying their income without using IRS tax returns.
2. Title companies will have a challenge providing free and clear title without verifying sellers tax liens.

Any thoughts on things a seller might do proactively regarding the title issue? We are listing a house in Sterling this week. Would it be smart to contact the IRS ourselves and get some sort of verification from them to give to the buyers for their title search? I know that's not how it's usually done (and maybe not how it CAN be done). Just trying to think of what can be done in advance, if things are going to take a lot longer with the IRS workload backing up.

[Deeman804]

This is anecdotal but my buddy and his wife are both government contractors that planned on buying this year and are not being paid right now. Now that he and his wife’s PTO is drained they have to live on their savings. This drastically reduces his chances on purchasing this year. I have a hard time believing that he is the only person in this sort of predicament. The longer this drags on, the more effect it has on potential buyers in the Washington region.

[ersatz]

Originally Posted by Piney Creek

Any thoughts on things a seller might do proactively regarding the title issue? We are listing a house in Sterling this week. Would it be smart to contact the IRS ourselves and get some sort of verification from them to give to the buyers for their title search? I know that's not how it's usually done (and maybe not how it CAN be done). Just trying to think of what can be done in advance, if things are going to take a lot longer with the IRS workload backing up.

The IRS is one of the agencies affected by the shutdown. About 12% of staff are essential for security and computer operations. They are working without pay. The agency is not issuing refunds, updating tax forms or answering questions.


https://www.cbsnews.com/news/governm...filing-season/