The first shockwaves of the federal government shutdown are already showing up in Florida’s housing market, and experts say the ripple effects could spread across the country.

Flood insurance renewals are on hold, builders are facing delays, and homebuyers using federal loans are stuck waiting. What began as a pause in paperwork is now threatening one of Florida’s biggest economic engines: real estate.

Florida’s housing sector accounts for more than 24 percent of the state’s economy, the highest in the nation. Every home sale in the Sunshine State generates roughly $125,000 in local economic activity and supports about two jobs. So when things slow down there, it can make a real difference nationwide.

Economist Anthony Smith at Realtor.com put it this way: “Given Florida’s large share of national housing activity, even a modest pullback in buyer engagement could visibly nudge national sales and inventory metrics.”

The biggest red flag right now is the lapse in the National Flood Insurance Program, which covers 1.8 million policies in Florida alone. If Congress doesn’t restore funding soon, thousands of homeowners could find themselves uninsured during hurricane season…a risk that could send shockwaves through lending and real estate markets alike.

For now, Fannie Mae and Freddie Mac are relaxing flood insurance requirements to keep closings moving, but it’s only a temporary fix. New-construction buyers don’t have that luxury, and their closings may be stalled until Congress acts.

While this story centers on Florida, it’s a reminder that real estate markets are deeply connected. What happens there can eventually affect lending, confidence, and sales everywhere - even right here in the Lowcountry.

~Roni

Article sourced from realtor.com