A government shutdown might seem like something happening far away in D.C., but it can have real consequences here in the Puget Sound housing market. If you’re thinking about buying, selling, or refinancing, here’s what to keep an eye on.

• Flood Insurance: The National Flood Insurance Program (NFIP) can’t issue new policies during the shutdown. The NAR says NFIP policies may be assigned from seller to buyer during a lapse, and most lending regulators have issued guidance providing flexibility. Private market flood insurance is also an option. 
• Loan Processing: FHA, VA, and USDA loans may face delays. Same goes for IRS income verifications, which lenders often need for approval. That means deals could take longer than expected.
• Housing Programs: Federal housing programs (think VA and USDA) could experience delays in processing times.  

1. Delays in Loan Processing

Many lenders need IRS income verifications or Social Security number checks before closing. If these agencies are partially shut down, you could see longer timelines. For buyers using FHA or VA loans (common in our region), approvals may slow down — especially in competitive areas like Seattle, Bellevue, or Redmond.

2. Potential FHA and VA Bottlenecks

Many first-time buyers and military families in our area rely on FHA and VA loans. If the shutdown stretches on, funding backlogs can grow, pushing closing dates further out and creating uncertainty for both buyers and sellers.

3. Interest Rate Volatility

The Northwest market is sensitive to mortgage rate changes. Economic uncertainty from a prolonged shutdown can cause interest rates to bounce around, which may affect monthly payments and buying power — especially for homes in higher-priced neighborhoods.

4. Permits and Insurance Reviews

In areas near water or environmentally sensitive zones (think West Seattle, North Bend, or Kitsap County), certain flood insurance or environmental reviews rely on federal offices. If those processes are paused, it can delay new construction, remodels, or even closings.

5. Local Buyer Confidence

Many local buyers work in industries tied to federal contracts or agencies. A paycheck delay or uncertainty can lead some to pause their home search, softening short-term demand. That can affect how fast homes go pending — especially in price ranges where FHA or VA loans are common.

Bottom Line

A shutdown doesn’t mean the market stops — but it can add extra steps and longer timelines. Sellers should build a little more flexibility into their expectations. Buyers should get their loan documents in early and stay in close contact with their lender and agent.

Being prepared and proactive can help you move forward confidently, even during uncertain times.