GOVERNMENT SHUTDOWN TREATENS REAL ESTATE CLOSING NATIONWIDE

TODAY'S HOT NEWS

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With a government shutdown looking tomorrow night at midnight, one of the most impacted programs is the National Flood Insurance Program (NFIP). The real estate sector now comprises about 20% of the US economy, so this could hit us hard.


Flood insurance is required on Fedrally funded mortgages and it covers nearly 5 million homeowners. NAR estimates that a lapse in NFIP authorization could threaten 1,300 property transactions per day. Existing policies won't be canceled, but if they expire without an extension to the program, that could be problematic.


The longer the shutdown, the greater the potential damage. The only question seems to be how long it will last. There have been 22 government shutdowns in the last 50 years. One thing is for sure: In a shutdown, no one wins. And anyone involved in a real estate transaction, could be sitting on the sidelines, waiting for the stalemate to break.
I've been down this road many times over the years, and it's never pretty. Buyers have given their landlord notice and moved out, they have their furniture on a truck, ready to move in. Sellers need their proceeds to purchase their next property and move on with their lives. And then the lender says "no flood insurance, no closing". Tensions run high, attorneys get involved, and it becomes a very volatile situation. Let's hope that those knuckleheads in Fort Fumble will figure it out quickly and mitigate the impact on too many families.


In brighter news, Fla. leaped past New York to be No. 2 in housing values, trailing only Calif. The total value of the U.S. housing market surged more than $2.6 trillion over the past year, according to a Zillow analysis, largely due to rising home prices and the value of new construction. Florida has been at the forefront of that value gain, according to the data used in the study. In the latest analysis of total real estate value, the Sunshine State took over the No. 2 spot, bumping New York State down to third place. California retains the top spot with more than $10 trillion of value – nearly 20% of the U.S. total.

In a list of the top 20 U.S. metros based on the total value of their real estate, two Florida metro areas make the list:

5. Miami-Fort Lauderdale: $1,269.8 billion, up $100.5 billion since June 2022 – 8.6% 18. Tampa: $521.1 billion, up $18.5 billion since June 2022 – 3.7%. The total value of the U.S. housing market – is now slightly less than $52 trillion, or $1.1 trillion higher than a previous peak reached in June 2022. A small chunk of that growth can be attributed to a 0.7% rise in the average value of a U.S. home during that time, but the main value change comes from new construction. Of the six markets where housing gained the most value since the start of the pandemic, four are in Florida:

Zillow attributes large population growth as one reason for Florida’s strong new construction figures, but stronger competition for existing homes also played a role. And that population growth is expected to continue til at least 2030. So if you're not happy with the traffic right now, just stick around for a while and watch what happens...