Question: How might the federal government shutdown affect Bay Area real estate?

The 2025 federal government shutdown has the potential to slow down real estate transactions across the country, including here in Marin County. The effects range from delays in government-backed loan processing to buyer hesitation caused by the uncertainty a shutdown creates.

The loans most likely to be affected are government-backed mortgages (such as VA and FHA loans), conforming loans (Fannie Mae and Freddie Mac), and properties located in flood zones that require National Flood Insurance Program coverage. Borrowers who need IRS tax transcript verification or federal employment verification may also face processing delays.

While most federal agencies have contingency plans that allow “essential” functions to continue, they often operate with reduced staffing, leading to longer wait times and slower approvals.

After informally surveying mortgage brokers and real estate agents in Marin, only a few reported direct fallouts so far: one buyer canceled a VA loan due to processing delays, and another transaction involving a flood-zone property remains in jeopardy because flood insurance cannot currently be issued. Bay Area buyers and sellers should prepare for possible slowdowns, especially if the shutdown persists. The longer it continues, the more likely it is that these delays will ripple through our local housing market.

Liz was featured in the SF Chronicle for the weekly Real Estate “SoundOff” on Sunday, October 19, 2025, to answer this question. The above is her longer answer to this question.