Housing market could be affected by shutdown

April 8, 2011 12:00:00 AM PDT
If there is a shutdown, how would it affect the Bay Area? When the government runs out of money, typically the national parks would shut down, military pay would be held up, and tax refunds could be delayed. But on Friday afternoon, an East Bay realtor explained how the buying and selling of a great many homes could be brought to a standstill.

Alexis Barone saved her money, knew it was a buyer's market, and thought she'd found the home of her dreams.

"As soon as we walked in, I just know that was the one. So, I just felt, it was great," said Barone.

Barone saw the condo on Saturday, made an offer on Sunday, and it was accepted on Monday.

"Everything went along beautifully until yesterday when I was told there could be an issue," said Barone.

The issue is the government shutdown. Barone's loan was backed by a Federal Housing Administration or FHA. If the government shuts down, her loan will be put on hold.

"What does that do to the deal? The deal could go bye-bye or at least pended until they do process the loans," said Barone.

Barone's real estate agent is Vickie Nagy.

"It could definitely slow my business a lot. I would be hugely impacted by this particular issue," said Nagy.

Nagy told ABC7 half the homes she sells are backed by FHA mortgage guarantees because the required down payment is so low, just 3.5 percent.

When asked if Barone had any more money to put down, she said no. She said, "It's 3.5 percent or I'm out."

And she means that literally, Barone has already given notice on her apartment in Dublin. New tenants are moving in the first of the month. Watching the budget impasse in Washington D.C. has suddenly become very personal and frustrating.

"Frustrating to say the least. I mean I was looking forward to moving into my first home, not putting my stuff in storage and having to stay on somebody's couch," said Barone.

The question we asked our political analyst in Washington D.C. was: if the government shuts down, how long will it likely last?

"I don't think it can last that long," said ABC7 political analyst Prof. Bruce Cain, Ph.D.

Cain notes that soldiers in combat will have their pay held up if the government shuts down. That will disrupt their families and it will put pressure on lawmakers who are for now holding with the tea party to cut it or shut it.

"It's possible that this will be more like the 80s where you'll have one two or a couple of days of a shutdown, but it would be surprising if it went three weeks or more the way it did in '95 and '96," said Cain.

Early Friday evening, Republican leaders in the House called their rank and file to a late night meeting.

We want to hear from you!

We know a government shutdown will impact many of you very personally and we'd like to hear and share your reaction to what's happening. So we are inviting you to take your cell phone or Flip camera, record your view and send it to us, through ABC7's uReport Powered by YouTube. Simply email your comment to uReport@kgo-tv.com, or visit uReport.abc7news.com.

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