Real Estate

How would a government shutdown affect the real estate market?

These experts have been down this road before.

The Capitol is seen on Tuesday night, Sept. 26, 2023, in Washington, D.C., as lawmakers work to advance appropriations bills on the House floor. J. Scott Applewhite/Associated Press

By Jim Morrison -- Boston.com Correspondent

September 28, 2023

President Biden and Congress are facing another government shutdown. If they can’t reach a deal by Oct. 1, different federal agencies will begin cutting back on services or shutting down completely, which would be bad news for wide swaths of the American public. The impact on real estate depends largely on how long the shutdown lasts, according to the Department of Housing and Urban Development.

Gerry Bourgeois is senior adviser to the CEO and COO of Lamacchia Realty. He’s been through more than a few government shutdown threats and actual shutdowns in his 30-plus-year career. It looks increasingly like the government will shut down this time, Bourgeois said, and if it lasts only a few days, it won’t affect most home sales at all.

“Thankfully, this is happening at the beginning of the month,” he said. “It’s not towards the middle to end of the month, when closings tend to generally take place and loan-related verifications and other things happen.”

The last time the government shut down was at the end of the month, and it turned out to be the longest one in American history. From Dec. 22 2018, to Jan. 25, 2019, the shutdown dragged on, and Bourgeois saw the impact on his business.

“I remember closings getting delayed because tax transcripts couldn’t be pulled,” he said. “There were some issues with FHA assigning case numbers. And this time … flood certifications could get impacted. You never want to see a government shutdown.”

Matt Gorman, principal broker at Edge Realty Advisors, expects the impact on the rental market to be minimal because relatively few leases start between October and January.

“At worst, what I would see is owners who are renting to Section Eight tenants might have some delay in payments,” he said. “It’s not that they wouldn’t get paid. The odds of that impacting the market writ large are small. The only other way it could impact is if there are people purchasing investment properties with FHA loans, but the impact would be small.”