Here’s how the government shutdown could affect the housing market
Unpaid workers are facing rent and mortgage payments
The government shutdown has no end in sight, and many federal workers are going without pay. But they’re still facing rent and mortgage payments.
An estimated 800,000 workers are furloughed or working without pay as the shutdown stretches into 18 days. And they owe about $438 million in mortgage and rent payments this month, Inman reported.
“In many parts of the country, housing affordability is already stretched and a single missed payment can begin the long process toward foreclosure or eviction — which has long-term impacts on an individual’s finances and long-term economic prospects,” Aaron Terrazas, Zillow’s senior economist said, in a statement.
At a time when the mortgage delinquency has hit an 18-year low, furloughed workers struggling to make payments could potentially cause an uptick, the report said. Mortgages in serious delinquency, or more than 90 days late on their payment, fell to the lowest level since 2006.
Plus, if the shutdown continues, it could have broader effects on the market. Prospective buyers, for example, may sit on the sidelines due to the missed paychecks. The housing market has already slowed, and the shutdown is delaying closings and hurting buyer confidence, Bloomberg reported. In a survey, about 20 percent of agents said they had clients affected in some way by the shutdown.
“It’s a completely unnecessary negative,” said National Association of Realtors Chief Economist Lawrence Yun. “If the shutdown quickly ends, then this will not become an issue. If it becomes prolonged, then it will hurt the economy.” [Inman] — Meenal Vamburkar