Federal shutdowns disrupt real estate deals, loans, and programs — owners should proactively adapt to delays and uncertainty.
The U.S. federal government has entered a shutdown due to stalled funding negotiations. This disrupts many federal programs and services that real estate businesses rely on.
Whether you're closing deals, managing properties, or planning new developments, a shutdown can slow things down in ways that impact your bottom line. Here's what to watch for.
Disclaimer: The impacts below are based on patterns observed during previous shutdowns. These insights are intended as guidance, not precise predictions.
Impacts of a government shutdown on real estate
Mortgage and loan processing delays
FHA, VA, and USDA loans may be slowed or paused due to furloughed staff. Closings could be postponed or canceled, especially for buyers using these programs. Even conventional loans might face verification delays.
HUD and Affordable Housing Program disruptions
Programs like Section 8, PBRA, and HUD contract renewals may be delayed or halted. Affordable housing operators could face cash flow gaps and uncertain funding, with maintenance and compliance risks if the shutdown persists.
Verification bottlenecks
Federal agencies like the IRS and SSA may stop processing tax transcripts and income verification documents. This creates a bottleneck for lenders who rely on these records to approve mortgages
Regulatory and permitting delays
Federal reviews, environmental assessments, and certifications required for new developments may be postponed, shifting timelines and increasing costs.
National Flood Insurance Program (NFIP) lapse
The NFIP may lose its authority to issue or renew policies during the shutdown, halting transactions where lenders require flood insurance. Buyers and sellers in FEMA-designated zones may face stalled deals and increased uncertainty.
Small Business Administration (SBA) loan suspension
The SBA may pause new loans, affecting financing for acquisitions, renovations, or equipment. This can delay growth plans and strain liquidity.
Federal leasing and contracting delays
Real estate transactions involving federal tenants or properties may be delayed. Lease negotiations, renewals, and maintenance contracts could stall. This affects landlords and service providers with government clients.
Demand slowdown near federal employment centers
Markets with high concentrations of federal employees or contractors may see reduced leasing activity and foot traffic, causing weaker demand and increased vacancy risk.
Credit and capital market constraints
Lenders may tighten credit standards due to uncertainty, especially for deals dependent on federal programs. Risk premiums could rise, and access to capital may become more limited.
Suspension of federal economic data
Key reports from certain agencies may be paused, which may create an information gap for market forecasting. Investors and developers may hesitate to make decisions without reliable data, which could translate to slower transaction volume and cautious capital deployment.
Shutdown recommendations for real estate business owners
Monitor legislative developments and local trends
Stay informed about Congressional negotiations and agency updates. Industry associations often provide timely insights. Tracking developments can help you make informed decisions and adjust strategies accordingly.
Audit or flag vulnerable investments of future deals
Review all active transactions to identify those dependent on federal approvals, funding, or insurance. Flag at-risk investments or deals and communicate proactively with buyers, lenders, and title agents. Prepare fallbacks like alternate financing or contract extensions.
Talk with lenders proactively
Check in with lenders about how the shutdown might affect underwriting. Ask if they have workarounds for federal verification delays. Early communication can prevent surprises and delays.
Manage liquidity and cash flow reserves
Assess your cash reserves and financing to verify they can weather revenue delays. Consider tapping credit lines or capital markets — strong liquidity helps maintain operations during uncertain periods.
Negotiate contract flexibility
Build in contingencies, buffer days, and escape clauses in purchase agreements. Adjust closing timelines and “drop-dead” dates to reflect the uncertainty caused by agency slowdowns. This can help preserve deal viability and client confidence.
Explore alternative financing and insurance options
If you’re affected by FHA, VA, or USDA loan delays, try conventional loan alternatives. In flood-prone areas, investigate private flood insurance that may satisfy lender requirements.
Adjust marketing and sales expectations
Set conservative sales forecasts and closing timelines to reflect potential delays. Focusing your efforts on deals less federally dependent can help maintain momentum and reduce the risk of failed transactions.
Shift focus and diversify
Prioritize properties or segments less impacted by federal disruptions, like privately financed commercial or multifamily assets. These may remain attractive to investors and buyers even during a shutdown.
Maintain transparency with stakeholders
Keep investors, capital partners, lenders, and tenants informed about risks and contingency plans. Transparent communication builds trust and positions your business as proactive and resilient.
Use the downtime strategically
Use slower periods to refine operations, strengthen relationships, and prepare for post-shutdown recovery. This may include updating documentation, renegotiating terms, or conducting portfolio reviews.
How CLA can help with industry instability
Our real estate professionals are here to help you navigate the uncertainty caused by the federal shutdown. We can assess how your deals, funding sources, and operations might be affected — and help you build contingency plans to stay on track.
CLA will continue to share timely updates on regulatory changes and offer financial and operational guidance to support your business.