CNBC Writes: For housing, shutdown is ‘freeze of the pipeline’

 

The fight may be in Washington, but the effects of the government shutdown will ripple through every neighborhood in America-without a fully functioning government, an already tight mortgage market may become even more prohibitive. It is exactly what the housing recovery does not need.

“This is going to be very disruptive to the mortgage industry and pretty much result in a freeze of the pipeline,” said Craig Strent, CEO of Bethesda, Md.-based Apex Home Loans. “New loans can be taken, but without IRS and Social Security number verifications, [they] will not be able to proceed to closing.”

“It certainly won’t help housing. Among other things, it is likely to spook would-be homebuyers,” said Cecala.

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I am not in the camp that believes the US Government shutdown will be a lengthy one.  Although I could be wrong,  either way I don’t believe the shutdown will have any impact on the overall US Real Estate Market.

As I have mentioned many times before, the US Real Estate market is in final stages of secondary bear market rally. Meaning that is in the process of topping and will revert to its downward movement soon enough.  There are only two primary forces driving it forward.  Interest rates and speculation.  Speculation will exhaust itself in due time while interest rates will continue oscillate here with overall upward trajectory (read my previous interest rate analysis).

Could this event be viewed as the top when the people look back a few years from now? Perhaps. If mortgage originators cannot truly proceed with loan underwriting process without IRS/SS verification we can have a freeze. However, I don’t believe that would be the case. In case of a prolonged shutdown they will find a way around it. 

All we can do now is watch the numbers and see if this has any impact. 

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