How the Government Shutdown Is Affecting Real Estate — Nationally and in Boston

The ongoing federal government shutdown is already creating turbulence in the real estate sector. From missing economic data to delays in mortgage and flood-insurance programs, its effects are being felt across the country, and in a unique way here in Boston. Below is a breakdown of the broader impacts, followed by some observations on how this may affect our local market.

National / Broad Impacts

1. Economic Data Gaps Make Forecasting Tough
Key releases from agencies like the Bureau of Labor Statistics, U.S. Census, and Bureau of Economic Analysis may be delayed or paused. That removes a critical feedback loop for real estate professionals, who often rely on these data points to gauge demand, pricing, and market momentum.

2. Federal Employee Pay Disruptions
With federal workers furloughed or working without pay, markets that have a concentration of government employees (especially in the Washington DC metro area, but in other markets as well) may see softness in buyer demand. Those affected may delay purchases or scale back plans, tightening liquidity in local real estate markets. 

3. Buyer & Seller Hesitation
Uncertainty often leads to hesitation. A survey by Redfin found that about 17% of Americans are delaying major purchases like homes or cars because of the shutdown. Some are canceling plans altogether. Others are simply “pressing pause.” Meanwhile, 65% reported the shutdown had no impact on their purchasing plans.

4. Mortgage Programs Under Pressure
Government-backed lending programs (FHA, VA, USDA) may face slowdowns in processing or approvals due to reduced staffing in federal agencies. Delays could extend to closings, endorsements, or new commitments.

5. Flood Insurance Delays
One of the more concrete and immediate constraints: the National Flood Insurance Program (NFIP) cannot issue new policies during a shutdown. That’s a serious issue in flood-prone regions, where mortgages often require such coverage. Even short-term disruptions could delay thousands of home closings.

Impacts on Lending 

Most home loans are still moving forward, but there are some changes and delays to be aware of. Here's a summary of the impacts, as reported to us by a local, trusted lender. 

Conventional Loans

• Still available, even for furloughed workers (need recent pay info).
• Job verification may be delayed, but lenders can work around it.
• If shutdown lasts past Nov. 3, 2025, you may need extra savings.

FHA Loans

• FHA still insuring regular home loans.
• Reverse mortgages & some special programs are paused.
• Condo approvals needing HUD review may be delayed.

VA Loans

• VA loans still available & guaranteed.
• Service may be slower due to staff furloughs.

USDA Loans

• Mostly on hold.
• If you had USDA approval, your loan can move forward.
• If not, you must wait until program reopens.

Taxes & Income Checks

• Lenders can still access IRS records—no disruption here.

Flood Insurance

• NFIP not writing new/renewal policies during shutdown.
• Current policies remain valid until expiration.
• FHA loans in flood zones cannot close without NFIP coverage.

What This Means for You:

• Most loans (Conventional, FHA, VA) still available.
• USDA & flood insurance are main holdups.
• Federal workers can still qualify but may need extra proof/savings.
• Tip: Stay in touch with your lender for updates.

The Boston Market 

The Boston area has its own characteristics, which may magnify or moderate some of the national impacts:

A. High Barrier to Entry + Elevated Expectations
Boston’s real estate market is already plagued with low inventory, high competition, and steep price expectations. A nationwide slowdown or dampened buyer sentiment could exacerbate price softening in certain submarkets (especially those on the fringe or in weaker-performing corridors).

B. Sensitivity in the Professional / Government-Adjacent Workforce
Greater Boston is home to many sectors tied to government funding, public universities and agencies. If federal uncertainty trickles into research grants, contracts, or operating budgets, some segments of the buyer pool could pull back or delay decisions. We have already seen this happening in certain industries that rely on government grants due to previous government cutbacks. 

C. Flood-prone Neighborhoods & Insurance Burdens
Areas along Boston’s waterfront, near rivers, or in flood zones may see more friction in closings. Because lenders often require flood coverage, disruptions in NFIP policy issuance could stall or reschedule closings unless buyers seek private flood insurance alternatives.

D. Municipal Budget Pressure & Tax Shifts
Boston’s municipal budget heavily depends on commercial property tax revenues. But commercial real estate has been under stress, especially office buildings facing high vacancy rates. As commercial values decline, residential property owners may shoulder more of the tax burden. This dynamic can affect homeowner sentiment, cost of ownership, and even market liquidity in Boston’s neighborhoods.

E. Slower Permits & Development Approvals
While most zoning and permitting in Boston is handled locally, some projects require federal review or environmental clearances. A shutdown could stall those components, delaying construction starts, certifications, or regulatory reviews — particularly in larger redevelopment or infrastructure-adjacent projects.

F. Local Data Blind Spots
With federal agencies scaling back, local real estate researchers will have to rely more on private data (MLS trends, city permit data, commercial brokerage reports). That may increase divergence in what people believe is “market reality.”

While the timeline of the shutdown is unknown, the key here is knowing how it may impact real estate and how to pivot, build in extra time and contingencies. We don't anticipate the shutdown will affect the majority of our clients, but we are continuing to monitor the situation.