When I woke up this morning and heard the about the government shutdown, my first thought was, how it will effect Denver Real Estate? With the market still booming right now, I always dread these types of incidents popping up and slowing things down. After doing some research though, I feel pretty confident that the shutdown won't have a significant impact on the market as long as it is brief.
The biggest area of concern with the housing market whenever there is a government shutdown has to do with the mortgage side of the business. Since 90% of all loan activity is underwritten, insured or owned by government and its affiliated entities there is inevitably going to be a slowdown. FHA loans will feel the biggest impact. FHA will continue to underwrite and review loans but with a much reduce staff. This means that FHA loans will take much longer to process and if the shutdown drags on, could result in serious issues with FHA loans. Luckily only about 15% of all loans right now are FHA loans and it seems like that number is decreasing by the month.
For conventional loans, there shouldn't be as significant as impact. Since mortgages purchased and secured by Fannie Mae and Freddie Mac are paid for by lender fees it appears these loans will continue to be issued with no hitch. However, I did just find out that it is more complicated than that. Most lenders are going to have to request tax return transcripts for the borrower prior to closing and guess what government office isn't issuing those right now? You got it, the IRS.
To summarize, the Denver Real Estate market shouldn't be impacted significantly since loans should continue to be funded, just be prepared for it to take a little longer than normal and the closing date you set at the beginning of the offer may be more of a goal than an actuality. As always, cash will be king so keep that in mind if you can make a cash offer or are competing against cash offers. Hopefully this will all be resolved quickly and it will have very little impact on the Denver Real Estate market. If it goes longer, we will have to wait and see so make sure you are prepared when making or accepting an offer moving forward. To read more details about the shutdown and its impact on the housing market, click here.
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