For the past month or so, “we”, including me, have been talking about all of the ways that the Federal Government Shutdown a/k/a “Schumer Shutdown”, can harm the real estate market. Then my contrarian way of thinking made me wonder: what could be some benefits from the “Schumer Shutdown”? Here goes…
- Lower Mortgage Rates Due to Economic Uncertainty
- Shutdowns often trigger investor anxiety, leading to a flight to safety in U.S. Treasury bonds.
- This demand pushes bond yields down, which can result in lower mortgage rates, making home loans more affordable.
- Reduced Competition from Government-Backed Buyers
- FHA, VA, and USDA loan processing slows or halts during shutdowns due to furloughs.
- This can temporarily reduce buyer competition from those relying on government-backed financing, giving conventional buyers an edge.
- Price Softening in High-Government Employment Areas
- Areas with large federal workforces (e.g., D.C., Maryland, Virginia) may see softening demand due to furloughs and lost income.
- Investors and buyers with cash or stable financing may find discounted opportunities in these markets.
- Increased Appeal of Real Estate as a Safe-Haven Asset
- When the stock market becomes volatile due to political gridlock, some investors shift toward tangible assets like real estate.
- This can boost demand for income-producing or stable residential properties.
- Delayed Economic Data May Stall Rate Hikes
- Shutdowns often delay key economic reports (e.g., jobs, inflation), which the Federal Reserve uses to guide interest rate decisions.
- In the absence of data, the Fed may pause rate hikes, keeping borrowing costs lower for longer
That is it…I cannot think of any other “benefits” from the Schumer Shutdown. Can you?
CupOfJoeLuca 