The government shut down as of midnight on Tuesday after Congress failed to agree on competing budget bills.
In the days and hours leading up to the vote, Republicans and Democrats appeared to only grow more deadlocked. President Donald Trump fanned the flames, even teasing further layoffs and freezes of programs across federal agencies.
Experts say that the initial impact on the housing market will likely be limited, but in the event of a shutdown, as time goes on, some critical functions could be subject to the fallout.
Here are four things to watch as the situation develops:
Federal lending
The most immediate impact on housing will likely be felt around federal lending to homebuyers. Loans from the Federal Housing Administration or Department of Veterans Affairs could be delayed, according to analysis from Redfin’s head of economics research, Chen Zhao. Any loan applications that rely on tax or income verification from the Internal Revenue Service could also move slower.
Rental payments
A longer shutdown could begin to affect landlords and renters. Monthly subsidy programs, including the public housing operating subsidies and housing choice voucher subsidies would continue to run until they ran out of funding.
Section 8 contracts could run out of funds in a prolonged shutdown. In the 2019 government shutdown, which lasted 35 days, more than 1,000 housing assistance payments contracts were not renewed until the government re-opened, according to Nixon Peabody.
Mortgage rates
It’s possible for a significant government shutdown to lower mortgage rates, although this relationship isn’t ironclad.
But if a shutdown erodes confidence in the economy, that can drive investors to buy Treasury bonds, as long as they are still considered a safe investment. Demand for those bonds lowers their yields. Mortgage rates could then come down, since lenders use treasury yields to set them.
Insurance
The National Flood Insurance Program won’t be able to issue new policies or renewals if the federal government shuts down. Homebuyers who rely on that insurance, typically in flood-prone areas, could face delays, Zhao wrote.
Florida real estate could be hit the hardest, the Palm Beach Post reported.
Sales will likely still be able to close, as lenders waive flood insurance requirements, according to the National Association of Realtors. But if a flood happens, coverage can be unclear.