As with so many other types of economic activity, the government shutdown is causing more fear than actual harm in the housing market thus far.

But that doesn’t mean things won’t start going wrong in the very near future.

Various federal agencies play greater or lesser roles in real estate transactions. With most of them sidelined, simple matters such as closing on mortgages are becoming more complicated.

“It’s going to add up pretty quickly, because loans can’t be closed in many cases,” says Mark Zandi, chief economist for Moody’s Analytics, a financial research organization. “The damage is going to start to mount and in a few days it’s going to be a significant problem for the housing market.”

The market, which had grown more robust over the past couple of years, was starting to cool off this fall anyway, due to rising prices and interest rates.

If interest rates go up due to the fear or reality of a debt default — and the costs for short-term treasuries are already starting to spike — that would have major consequences for real estate sales.

“This government shutdown, which is an artificial obstacle to the recovery, is clearly not a good thing,” says Lawrence Yun, chief economist for the National Association of Realtors.

What’s Not Working

Anyone who has purchased or refinanced a house knows a lot of paperwork is involved. The tall stack of forms that buyers and sellers sign at closings is largely generated or required by federal agencies that may now be temporarily out of the game.

Still, real estate agents and mortgage lenders have thus far been able to work their way around many of the hurdles put up by the partial government shutdown.

 

 

 

http://www.npr.org/2013/10/08/230467533/how-the-shutdown-is-hurting-the-housing-market