Housing Market Faces Disaster As Govt Shutdown Looms

The cost of a government shutdown was laid bare by a report into its potential impact on the housing market. A shutdown was narrowly avoided at the last minute when House Speaker Kevin McCarthy rushed through legislation that kept the country’s cashflow running until November 17, but the consequences for homebuyers were probably not immediately considered by lawmakers emphasizing the impact of a shutdown on military personnel and law enforcement officers.

However, according to Newsweek, a government closure would have halted the sales of hundreds of homes and left families in limbo. One of the government agencies that would have ceased operating is the National Flood Insurance Program (NFIP), used by five million American families to protect against the financial risks of flooding.

In order to secure mortgages, most homes and companies must have some type of natural disaster insurance, and if parties to a sale or purchase of property suddenly found themselves without cover, the transaction would not proceed because, last December, the Federal Emergency Management Agency (FEMA) said that its NFIP would no longer issue policies in the event of a federal funding interruption.

The National Home Builder Association (NHBA) estimated that around 1,300 property sales would have come to a halt in the event of a shutdown in Washington, DC. Looking to the future, in the knowledge that the government is only funded until November 17 when the crisis could conceivably recur, Mark Friedlander, the director of corporate communications at the Insurance Information Institute, said the situation is “very concerning” because the 2023 Atlantic hurricane season is ongoing and the US will likely “continue to experience significant coastal and inland flooding.”

In the wake of the crisis, the Republican House Speaker faced a challenge to his leadership while President Biden scorned Congress and asked its Members to put the American people first and end its partisanship. Ninety Republicans refused to back McCarthy’s bill as it did not contain the spending cuts they were seeking.