Sponsored article courtesy RLAH Real Estate
Question: Will the government shutdown affect Montgomery County real estate?
Timely conversation topic. The short answer: yes, but not as much as you might think.
Why D.C. sets the tone
When it comes to a government shutdown, Washington, D.C. feels it first and strongest. Nearly 43% of D.C.’s workforce is made up of federal or government-adjacent employees according to usafacts.org. That concentration makes D.C. the best place to study market patterns during a shutdown.
Montgomery County, Maryland isn’t far behind. It’s estimated that between 54,000 and 77,550 federal workers live or work in the county plus another 48,000 federal jobs physically located here. That’s a huge share of the local economy, which means MoCo real estate does feel some slowdown during a shutdown. But the further you move from D.C., the smaller the impact becomes.
Contracts dip, then surge
During the two most recent extended shutdowns which were 35 days in 2018–19 and 16 days in 2013, home sales in D.C. followed a similar pattern.
- Contracts dipped during the shutdowns.
- Once federal paychecks resumed, activity jumped.
In 2018–19, pending sales in D.C. rose by about 35% in the 30 days after the government reopened. That bounce came right before the spring market, amplifying the recovery, so seasonality plays a part. The 2013 shutdown happened in October, where contracts are typically declining into the holiday season, yet even then, sales rebounded within a month.
The takeaway with the two most recent comparable events show that shutdowns tend to delay demand, not destroy it.
Closings slow when the government does
A shutdown doesn’t only stop paychecks; it stalls the federal systems many closings rely on.
- IRS transcripts: Lenders can’t verify income when IRS systems are offline.
- Government employees’ HR departments: If they’re furloughed, it’s difficult to verify employment or salary for buyers who work for federal agencies.
- FHA and VA loans: These can still close, but with limited staff, processing slows.
- Flood insurance: The National Flood Insurance Program (NFIP) can’t issue new policies without congressional reauthorization.
Most transactions still close but they can take longer. So if a loan officer seems slower to respond, it may be the government, not them.
Mortgage rates may dip
During past shutdowns, investors have shifted money into U.S. Treasury bonds, which lowers yields and often nudges mortgage rates down.
In the 2018–19 shutdown, the 10-year Treasury yield fell from 2.80% to 2.55%, a drop of about 25 basis points and roughly a quarter-point decline in mortgage rates, according to Wells Fargo Advisors. Other analyses show similar dips, typically between ⅛ to ¼ of a point.
I’ll leave the rate predictions to the lenders. I’m just an optimistic real estate guy who’s always hoping for a silver lining, and a small rate break during a shutdown would definitely count as one.
The bottom line for Montgomery County
For Montgomery County real estate, a government shutdown can delay demand. Contracts slow when paychecks stop, closings drag as federal agencies operate on skeleton crews, and mortgage rates may tick down. Once the government reopens, demand rebounds quickly.
With tens of thousands of federal workers and contractors living in Montgomery County, the area will feel some short-term ripple effects, but historically, the market has proven resilient every time.
So, if you’re buying or selling this fall, stay calm and strategic. The data and history suggest the market doesn’t stop. It just takes a brief detour.
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