If it does stretch on, he adds, the worry will be what mortgage rates do in a market shrouded in fiscal uncertainty and how that will affect the home buying, especially in light of recent rate spikes.
Home lending aside, many economists and real estate experts are keeping a close watch on how Americans will react to this shutdown. "Administratively everything should keep moving along, but it's more about the confidence of consumers and whether they perceive that the government shutdown could lead to a recession," says Lawrence Yun, chief economist at the National Association of Realtors.
Moody's (MCO) Analytics chief economist Mark Zandi recently told the Senate Budget Committee that a partial shutdown could shave as much as 1.4 percentage points off of fourth quarter economic growth if it drags on for several weeks.
Americans' confidence in their ability to buy and sell homes hit a record high in May, according to a Fannie Mae survey. Since then, as mortgage rates jumped more than a percentage point, that confidence level has plateaued. If prospective homebuyers fear that the country's economic recovery will stall, or worse slip back into recession, they will pull back on purchases, worries Yun.
"Home sales is always the first housing variable that changes so one would see sales declining and that would naturally lead to more inventory on the market and eventually put pressure on prices," he says. But that would be a worst-case scenario based on a long-term shutdown.
Jed Kolko, chief economist at Trulia (TRLA), notes that if the shutdown lasts longer than a few days, the first places to feel the impact will be local economies with large concentrations of federal government workers. Metro areas like Washington, D.C. and Bethesda, Md., where 19% and 13% respectively of total local wages go to federal employees, would be the feel the negative effects of unpaid furloughs and with them, tightened consumer spending and weakening local economic growth. Though not all will be equally affected, other metro areas like Virginia Beach, Va., Honolulu, Hawaii, and Dayton, Ohio are areas that Kolko is keeping an eye on: "Whether there is a big effect depends on how long the shutdown lasts, how long people think the shutdown lasts, and whether people get back-pay. All those things matter for the impact."
Still others are worrying even more about the next fiscal standoff, in mid-October, surrounding the debt ceiling debate and its accompanying threat of debt default by the U.S. "With the threat of an impending partial government shutdown and yet another battle over the nation's debt ceiling, in particular, we are really messing with fire right now -- even if it doesn't seem to bother some legislators," says Stan Humphries, chief economist at Zillow.
"But the effects of a government default associated with the impending debt-ceiling deadline would be more pronounced because of its greater impact on domestic and international markets. This will rattle consumers and investors alike, slow down the overall economic recovery and further slow the housing recovery, which is already undergoing a moderation in the pace of home value gains due to rising mortgage rates," he warns.
More from Forbes
VIDEO ON MSN MONEY
THE BATTLING BOYS OF BENGHAZI??
We're the battling boys of Benghazi
No fame, no glory, no paparazzi.
Just a fiery death in a blazing hell
Defending our country we loved so well.
It wasn't our job, but we answered the call,
fought to the Consulate and scaled the wall.
We pulled twenty countrymen from the jaws of fate
Led them to safety, and stood at the gate.
Just the two of us, and foes by the score,
But we stood fast to bar the door.
Three calls for reinforcement, but all were denied,
So we fought, and we fought, and we fought till we died.
We gave our all for our Uncle Sam,
But barack obama didn't give a damn.
Just two dead SEALS who carried the load.
No thanks to us.........we were just
"Bumps In The Road".
Please circulate this email....please keep it going so it will reach every American with a
computer. Something has to be done with the incompetent people who literally sat
there in the White House and watched the Seals execution on live streaming video
and did absolutely nothing. The Obama Administration, including former Secretary of
State Clinton, must be held accountable and that will not happen unless ALL of US demand it.
I blame the democrats and other vile, liberal vermin for this government shutdown and a potential interruption of the housing recovery.
The ACA is a costly venture for both individuals, businesses and the government.
Postpone the individual mandate until enough people can actually go onto the online exchanges and price out a policy. Then they will see that Obamacare is nothing more than a clip joint.
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The major averages finished the session on a lower note as the S&P 500 lost 0.4% while the Nasdaq shed 0.1%. The Russell 2000, which paced the retreat on Tuesday and Wednesday, added 0.2%, trimming its December loss to 3.5%.
After spending the first half of the session in a steady retreat, the S&P 500 found technical support in the 1772 area. Upon reaching that level, the index reversed sharply, and marched back to its flat line. There was no particular catalyst ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|