Should Triangle homebuyers be worried about government shutdown? What experts say

The federal shutdown hits the four-week mark on Tuesday, and it’s slowly beginning to ripple through the Triangle housing market, say experts.

Among the disruptions: the suspension of the National Flood Insurance Program (NFIP), delays on government-insured loans, and a complete halt to USDA rural housing loans. Rental assistance and community development projects are also operating at limited capacity.

Analysts say these setbacks are “destabilizing,” adding volatility to a market already struggling with affordability and supply challenges. It’s especially tough on first-time buyers, lower-income households and veterans, who rely on federally backed programs.

“Each additional day of uncertainty threatens programs that help buyers, sellers and property owners navigate an already challenging market,” said National Association of Realtors executive vice president Shannon McGahn.

Congress remains deadlocked over a stopgap funding bill with no deal in sight. It’s now the second-longest funding lapse in U.S. history, with roughly 83,000 federal workers in North Carolina impacted, many furloughed or working without pay.

On Day 28, are the trickle-down effects being felt on the ground in the Triangle?

According to John Wood, owner of REMAX United in Cary, there are delays in processing USDA loans, “but we haven’t seen any other issues.”

Shutdown notwithstanding, the overall economic environment is “positive,” he said. “With interest rates around 6%, the market is very active.”

Since the shutdown began on Oct. 1, the National Flood Insurance Program (NFIP) has lapsed. It accounts for 88% of the nation’s flood insurance and is managed by the Federal Emergency Management Agency. While existing policies remain active and transferable, no new policies or renewals can be issued. Experts say it’s leaving millions of high-risk properties in limbo or uninsured across the country, including in North Carolina. It’s also exposing homeowners in the middle of hurricane season.

“While private insurers may fill some gaps, coverage could be become less consistent, straining household finances,” said First Street, a New York-based nonprofit research company in a recent report.

The shutdown is also complicating mortgage processing, experts say. FHA and VA loans account for roughly one-third of new mortgages, data shows. The current pause is likely slowing approval and causing delays in verifications from agencies like the Internal Revenue Service and Social Security Administration, they say. These checks usually happen seamlessly but are often unavailable when government offices are closed.

Ryan Fitzgerald, owner of Raleigh Realty, acknowledged that the shutdown is causing anxiety. “Whenever there’s uncertainty around pay or contracts, you’ll start to see buyers taking a step back. Right now, this is obviously going to affect federal employees and contractors the most.”

But for now, the market remains “resilient,” he said. “Local demand, job growth, and ongoing in-migration are what are keeping things from freezing up entirely.”

In August, the Raleigh metro saw the largest jump in home sales, according to the latest REMAX National Housing Report. Closed transactions increased by 10.8% compared to the same period last year, outpacing every other metro in the U.S., data showed.

The median home sale price is $452,335, up 3.7% year over year. Meanwhile, inventory is up 45.8% year over year.

Even though the impact isn’t immediate, Fitzgerald urged caution. “It’s a watch-and-wait” situation. “If this continues, it’s likely to build,” he said.

Tana Widdows, a Compass agent at Terra Nova real estate services in Chapel Hill, encourages would-be buyers to stay informed, especially if they’re considering buying in or near a flood-prone area.

“The NFIP has gone through temporary lapses before,” she said. “That said, I advise clients to work closely with their lenders and insurance agents to understand how a lapse affects closing timelines and their monthly payment.”

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