The National Association of REALTORS® is working to protect the real estate economy as a government shutdown appears increasingly likely by Oct. 1 if Congress does not pass stopgap spending measures. Without a deal to fund the government by the end of the fiscal year on Saturday, an array of government services critical to the real estate sector will come to a halt—including the reauthorization of the National Flood Insurance Program (NFIP).
“Absent a last-minute deal, there is a consensus in Washington now that the government will shut down this weekend. The only question seems to be how long it will last,” says NAR Chief Advocacy Officer Shannon McGahn. “Our advocacy team is in continuous contact with lawmakers over how this shutdown will affect the real estate sector, which makes up nearly 20% of the entire U.S. economy.”
NAR also posted an urgent primer Tuesday explaining how a shutdown affects its members and the real estate industry at large.
“It is important to put this possible shutdown in perspective,” McGahn says. “The U.S. has lived through 22 government shutdowns in the last 50 years. The longer the shutdown, the more harm done. One thing is for sure: In a shutdown, no one wins. There are a lot of factors at play at the moment; we have a political dynamic that is pretty unprecedented.”
The longest government shutdown lasted 34 days from December 2018 through January 2019.
Fight for Flood Insurance
One of the most impacted programs during a government shutdown is the NFIP. Flood insurance is required for federally insured mortgages, and nearly 5 million property owners rely on the program in more than 20,000 communities across the country.
“The NFIP’s authority to write flood insurance has been extended 25 times since 2017 alone,” McGahn says. “These extensions are in large part a result of NAR’s significant advocacy efforts. Our members should know we are working behind the scenes with lawmakers of both parties to keep this critical program going.”
On Tuesday, NAR launched a targeted call to action for its federal political coordinators in an effort to reach and educate every member of Congress about the NFIP this week. Each member of Congress has a REALTOR® from their district designated as an FPC to convey urgent advocacy messages from NAR.
NAR estimates that a lapse in NFIP authorization could threaten 1,300 property transactions per day. “However, existing policies won’t begin to expire during the first 30 days of a shutdown, and those policies can be transferred from sellers to buyers after a lapse,” McGahn says. “So, again, the longer the shutdown, the more harm done.”