Blog > How the Federal Government Shutdown Could Affect San Diego’s Housing Market
How the Federal Government Shutdown Could Affect San Diego’s Housing Market
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The federal government has shut down again, and while that might sound like a problem only for Washington, D.C., the ripple effects can reach all the way to San Diego’s housing market. From mortgage delays to shaken buyer confidence, here’s what homeowners, buyers, and sellers should know if the shutdown continues.
1. Mortgage Processing Delays
Federal loan programs such as FHA, VA, and USDA are already operating with limited staff, creating backlogs and slower approvals. These programs are common among first-time buyers and veterans in San Diego County.
2. Flood Insurance Roadblocks
The National Flood Insurance Program (NFIP) can’t issue or renew policies during the shutdown, which could delay closings for homes in flood-prone zones like Mission Valley or the San Diego River basin.
3. Confidence Is Taking a Hit
About one in six Americans say they’re postponing major purchases—including homes—because of uncertainty surrounding the shutdown.
4. Mortgage Rates Could Fluctuate
A shutdown can push investors into safer assets like U.S. Treasuries, which may cause temporary dips in mortgage rates. But volatility can just as easily return if the situation drags on.
5. The Local Impact
Delays could reduce the number of closings in San Diego County. Military and VA borrowers may face processing slowdowns, and appraisal and title timelines might stretch as lenders juggle verification delays.
6. What Sellers and Buyers Can Do
Sellers: Price strategically, stay flexible with timelines, and make sure the property shows well.
Buyers: Stay pre-approved, maintain communication with lenders, and be ready to lock if rates move in your favor.
7. A Short-Term Setback, Not a Long-Term Collapse
While a prolonged shutdown can temporarily slow activity, history shows the housing market rebounds quickly once funding is restored. Well-prepared homes are always the first to benefit when confidence returns.
Sources
- National Association of REALTORS® – What a Government Shutdown Means for REALTORS®
- MarketWatch – A Government Shutdown Would Hurt Home Buying Deals Just as Buyers Are Coming Off the Sidelines
- Reuters – US Government Shutdown Threatens Home Sales in Flood-Prone Areas
- Newsweek – Americans Hold Off on Home Buying During Shutdown
- Better.com – How a Government Shutdown Could Affect Mortgage Rates
