The director of the College of Charleston Carter Real Estate Center looks at the battle over the shutdown and the possible impact on the real estate markets.

The housing market is the next industry that could be impacted by the government shutdown. Experts say the extent to which home buyers could feel the pain depends largely on how long the budget impasse on Capitol Hill goes on.

“Any time you have a hit on people’s pocket book, it has the potential to hurt the real estate market, “ says Elaine Worzala, director of the Carter Real Estate Center at the College of Charleston.

In the short term, consumers who have applied for FHA or VA loans should expect some delays as a result of the government shutdown. The FHA furloughed most of its staff, relegating duties to those who remained on the job to processing loan applications that were on the brink of closing.

Conventional and VA loans continue to move ahead. But with the IRS being closed by the federal shutdown, any loans that required tax or other documents to be processed could fall into limbo.

Worzala says even a shutdown lasting a few days could cause problems.

“With the government shut down, there are hundreds of thousands of government employees that are not sure when they are going to get paid.  That means they are going to have to start conserving their funds in order to pay their bills. That means they will spend less money in the economy so lots of other businesses, particularly those that are consumer based, can be impacted. There is always a ripple effect.”

[Related: Will the Government Shutdown Have a Major Impact on the College of Charleston?]

If the government remains shut down for a long period of time, experts agree that all bets are off.

“The longer is takes, the more nervous investors get and the more likely there will be falls in prices,” explains Worzala. “Sellers that are desperate to sell will discount.  And, values are based on recent sales. If those recent sales are lower, the value in the whole area becomes lower.”

For more information, contact Elaine Worzala at worzalaem@cofc.edu.