As the federal government shutdown continues, its ripple effects are being felt across the housing market, especially here in the DC Metro area. With real estate representing nearly 20% of the U.S. economy, this prolonged lapse in federal operations is creating uncertainty for buyers, sellers, lenders, and developers alike.
At Pearlman Meekin & Co., we’re keeping a close eye on how these changes are unfolding locally so our clients can stay informed and proactive, not reactive.
The Biggest Impacts So Far
1. Flood Insurance Halted
One of the most immediate and significant consequences of the shutdown is the lapse of the National Flood Insurance Program (NFIP).
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The NFIP supports roughly 4.7 million policies and more than $1.3 trillion in coverage nationwide, including many properties right here in the DC region.
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With the program paused, no new policies or renewals can be issued. That’s causing an estimated 1,400 property transactions per day to stall, particularly for buyers purchasing in high-risk flood zones who can’t close without flood insurance.
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Some buyers are turning to private flood insurance options as a short-term workaround, though those policies can vary in cost and coverage.
If your purchase or sale involves a flood zone, it’s crucial to stay in touch with your lender and agent to review alternatives early.
2. FHA, VA, and USDA Loan Delays
While FHA and VA loan programs remain operational, limited staffing has led to slower endorsement and processing times.
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Most FHA loans will continue to move forward, but some types, such as those that require manual underwriting, may be delayed. Lenders can still use FHA Connection and other systems, but any transactions requiring staff review may take longer.
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USDA loans, which support many first-time and low- to moderate-income buyers are completely paused, with no new loans or guarantees being issued during the shutdown.
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Lenders relying on IRS income or identity verification services are also encountering delays since those systems are currently offline.
These disruptions can add days or even weeks to the mortgage process, making communication and flexibility key.
3. Impact on Local Programs and Development
The shutdown isn’t just affecting individual transactions. It’s also slowing broader community and housing development programs.
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HUD funding for rental assistance, community development, and affordable housing grants is being delayed.
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Local governments and nonprofits are reporting challenges in receiving funds, getting compliance answers, and maintaining technical support for ongoing projects.
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Builders and developers are facing gaps in federal data collection and coordination delays on permits and infrastructure projects, adding another layer of uncertainty to an already tight housing supply.
What This Means for the DC Metro Market
Given our region’s concentration of federal employees, contractors, and government-backed mortgages, the shutdown’s effects are amplified here.
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Buyers may face longer timelines for financing and insurance.
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Sellers may need to show flexibility with closing dates and contingencies.
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Lenders and agents are stepping up communication and adjusting workflows to keep deals moving forward wherever possible.
The good news: most transactions are still proceeding, just with more patience and planning required.
Our Takeaway
Each additional day of the shutdown compounds these challenges, but that doesn’t mean real estate activity stops. It simply means it’s more important than ever to work with an experienced, well-connected local team who can help you anticipate obstacles and navigate them confidently.
At Pearlman Meekin & Co., we’re closely monitoring how the shutdown continues to affect housing programs, financing, and local transactions, and we’ll keep you informed as new updates emerge.
