VOL. 128 | NO. 195 | Monday, October 07, 2013
Memphis Housing Market Waiting for Shutdown Impact
By Amos Maki
The shutdown of the U.S government has had a minimal impact on the local housing market so far, but that could change if the shutdown stretches on for a week or more.
Homebuyers in the process of acquiring a house could be delayed while lenders are blocked from key actions like confirming Social Security numbers and accessing IRS tax records.
Because of deep staff cuts caused by the shutdown, borrowers seeking mortgages backed by the Federal Housing Authority could have to wait longer. The same goes for borrowers seeking loans backed by the U.S. Department of Agriculture, which backs loans in rural areas. The USDA has stopped taking new business during the shutdown, and loan processing has ground to a standstill.
“The impact has been minimal, unless you were waiting to close on a USDA loan,” said Sam Goff, loan officer with Evolve Mortgage. “The impact has been minimal unless you’re one of the federal employees waiting on a paycheck.
“We haven’t witnessed a slowdown yet with FHA. We are seeing a slowdown on tax transcripts and USDA loans have just stopped.”
In 2011, there were 2,197 FHA fixed-rate loans in Shelby County at the time of sale, according to real estate information company Chandler Reports. In 2012, there were 2,181 FHA fixed-rate loans in Shelby County at the time of sale, according to Chandler Reports.
The shutdown comes as the local housing market is having its strongest year since the recession and economic downturn battered the industry.
Local homebuilding experts have said Shelby County could see 1,000 home permits pulled this year, the first time the county has reached that mark since 2007. Year to date through August, builders had filed 629 permits, a slight increase from 618 for the same eight-month period in 2012. The county netted 1,709 home sales in August, up 15 percent from 1,483 sales in August 2012. Of Shelby County’s 33 ZIP codes, 24 had an increase in overall sales activity in August and 27 ZIP codes had an increase in average sales prices.
Goff noted that interest rates have dropped recently, which could help the housing market by inducing fence-sitters to buy a home.
The 30-year fixed-rate mortgage averaged 4.22 percent as of Thursday, down for the third consecutive week. It was 4.57 percent in the week ended Sept. 12, according to mortgage giant Freddie Mac.
“We may be in a strange place where (the shutdown) is helping our business in one way and hurting it in another,” Goff said.