{"id":15242,"date":"2025-10-21T02:45:12","date_gmt":"2025-10-21T02:45:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ca\/15242\/"},"modified":"2025-10-21T02:45:12","modified_gmt":"2025-10-21T02:45:12","slug":"why-californias-housing-market-is-still-standing-for-now","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ca\/15242\/","title":{"rendered":"Why California\u2019s Housing Market Is Still Standing\u2014for Now"},"content":{"rendered":"

The federal shutdown<\/a> is rattling housing markets in states like Florida<\/a>, but California\u2019s<\/a> has barely flinched.<\/p>\n

\u201cOverall, the California housing market hasn\u2019t shown signs of any major shifts since the government shutdown kicked off,\u201d says Realtor.com\u00ae<\/a> senior economic research analyst Hannah Jones. \u201cNew listing activity is up year over year, time on market is stable, and inventory growth is decelerating, holding with recent trends.\u201d<\/p>\n

It\u2019s a striking finding given how exposed California could be. The state ranks sixth nationwide for both FHA<\/a> and VA loan<\/a> volume, ninth for total USDA<\/a> housing investments, and sixth for the number of active National Flood Insurance Program<\/a> (NFIP) policies\u2014all federal programs now halted or critically delayed as the shutdown enters its third week.<\/p>\n

It\u2019s also significant because of California\u2019s sheer scale: Real estate makes up 17.6% of California\u2019s economy, contributing roughly $680 billion to the state\u2019s GDP and supporting hundreds of thousands of jobs across construction, real estate, and home services, according to the National Association of Realtors\u00ae<\/a>.<\/p>\n

But resilience has its limits, and the longer the shutdown lingers, the more pressure builds.<\/p>\n

\u201cEach day the shutdown continues compounds these challenges,\u201d writes<\/a> NAR Executive Vice President and Chief Advocacy Officer Shannon McGhan.\u00a0<\/p>\n

\u201cFor millions of Americans, it means uncertainty about closing dates, delayed access to affordable housing, and higher costs as markets react to instability,\u201d she adds. \u201cFor the broader economy, it risks slowing growth in one of the country\u2019s most important sectors.\u201d<\/p>\n

California\u2019s calm<\/p>\n

So far, the data signals stability for the Golden State.<\/p>\n

New listings<\/a> are up compared with a year ago, time on market is largely unchanged, and inventory growth continues to slow in line with national trends. That steadiness reflects who\u2019s driving California\u2019s market\u2014and how they buy.\u00a0<\/p>\n

Most borrowers in the state rely on conforming loans, which haven\u2019t been disrupted by the federal shutdown, while cash and jumbo buyers remain active in expensive metros like Los Angeles<\/a>, San Francisco<\/a>, and San Jose<\/a>.<\/p>\n

\u201cBuyer demand remains intact in California, as high-income, cash and jumbo buyers, who tend to be common in high-priced California metros, aren’t directly affected by furloughs,\u201d explains Jones.<\/p>\n

That activity highlights a key portion of the federal government that still is working, despite the shutdown: the IRS\u2019 Income Verification Express Service (IVES), which allows lenders to verify borrowers\u2019 tax information and keep mortgage approvals moving.<\/p>\n

Curtis Knuth, CEO of credit reporting and verification firm Service 1st<\/a>, says that his company has seen no disruption in delivery of the thousands of tax transcripts it requests from the IRS each week as part of the mortgage vetting process.<\/p>\n

\u201cFor the divisions that we work with, there’s no impact,\u201d he tells Realtor.com. \u201cNormal turn times are standing.\u201d<\/p>\n

Knuth explains that the IVES is self-funded by user fees, and thus does not require a new spending bill from Congress to continue normal operations.<\/p>\n

Lisa Binkley, the COO of Service 1st, says that about 97% of tax transcript requests through IVES are currently getting processed within three days, on par with turnaround times before the shutdown.<\/p>\n

For homebuyers, it\u2019s a spot of bright news as the government shutdown drags on with no end in sight.<\/p>\n

<\/p>\n

Ready for something new?<\/p>\n

Search new construction<\/a>Early signs of strain among government-backed loans<\/p>\n

But beneath that surface of calm, early fractures are forming.<\/p>\n

\u201cI\u2019ve seen a small cooling over the past couple of weeks in buyer enthusiasm, particularly for first-time buyers using FHA or USDA financing,\u201d says Bastien Wissmann, a New Properties & Investment Specialist<\/a>.\u00a0<\/p>\n

While these sales make up a small portion of California\u2019s real estate, the scale or importance of these programs shouldn\u2019t be underestimated. In June 2025 alone, California buyers took out $1.9 billion in FHA loans\u2014the third-highest volume in the nation, according to HUD\u2019s Single-Family Portfolio Snapshot<\/a>.<\/p>\n

While fewer than 1% of California homebuyers rely on USDA loans<\/a>, those who do often have few alternatives. And since 2024, the state has received nearly $20 billion in USDA funding<\/a> for single- and multifamily housing, ranking ninth nationally for total investment.<\/p>\n

Unlike conforming loans, these programs rely on federal staffing and approvals, both of which are now frozen. \u201cThe lack of clarity about government operations breeds caution, even among qualified buyers who would otherwise be eager to move ahead,\u201d Wissmann says.<\/p>\n

Sellers, meanwhile, are adjusting rather than retreating. \u201cMost are willing to extend the closing process a little longer or notch prices down slightly to keep deals chugging along, an acknowledgment of caution and optimism,\u201d Wissmann adds.<\/p>\n

Shutdown delays hit builders first<\/p>\n

But while the shutdown\u2019s effects have been mostly muted for the market at large, builders are starting to feel the drag<\/a>.<\/p>\n

\u201cBuilders and developers are beginning to complain about the slower processing of permits and inspections,\u201d says Wissmann. \u201cThese small delays can cause ripples throughout projects, especially for multiunit residential developments.\u201d<\/p>\n

While many permits are issued from local authorities, sometimes those authorities need federal coordination to move the process forward.<\/p>\n

\u201cRight now, the impact has been minimal, but the longer the shutdown goes, the more those reviews and permitting procedures are going to start clogging up,\u201d Russel Riggs, senior regulatory representative for NAR, told Realtor.com last week. \u201cAfter four weeks, you\u2019ll really start seeing the impacts very clearly.\u201d<\/p>\n

As we near the four-week mark in the shutdown, Gary Mkrtichyan, a developer and general contractor with Opus Builders<\/a> in Los Angeles, says he\u2019s run into significant delays since the start of October.<\/p>\n

He\u2019s currently overseeing several new-home projects in Hollywood that require city-managed infrastructure, everything from sewer connections to fire hydrant relocations. But recently, even routine requests have gone unanswered.<\/p>\n

\u201cI\u2019ve never seen this type of slow movement,\u201d he says.<\/p>\n

For developers, those delays can come with costly consequences.<\/p>\n

\u201cI\u2019ve paid close to $20,000 that went to waste because they can’t move efficiently and give us what we need to get our projects going,\u201d Mkrtichyan says.<\/p>\n

A hidden flood risk<\/p>\n

It\u2019s been widely reported that the lapse of the National Flood Insurance Program has put 4.7 million policies at risk at the height of hurricane season. But in California, there\u2019s an added danger.<\/p>\n

In wildfire-scarred regions, burned hillsides become more vulnerable to floods\u2014without vegetation, the ground can\u2019t absorb rainfall, heightening the risk of flooding even for properties that are outside of designated Special Flood Hazard Areas<\/a>.<\/p>\n

FEMA estimates<\/a> that flood risk remains significantly higher for at least five years after a major wildfire. Yet only about 4% of homes in wildfire-affected states carry federal flood insurance, leaving most owners\u2014and many new buyers\u2014exposed as federal coverage stalls.<\/p>\n

Less than a year after the devastating Palisades and Eaton fires<\/a>, that\u2019s an especially serious problem for Californians still rebuilding. With the NFIP stalled amid the federal shutdown, no new or renewed policies can be issued.\u00a0<\/p>\n

For buyers in high-risk areas, that bureaucratic pause can bring home closings to a sudden halt.<\/p>\n

\u201cIf the shutdown lingers, home sales could see delays related to insurance. For homes needing a new\/renewed flood insurance policy, the suspension of the NFIP puts closings at risk and slows down transaction activity,\u201d explains Jones.<\/p>\n

The lag effect: When stability turns<\/p>\n

For now, California\u2019s housing data looks calm, but in a market this interconnected, the effects of a freeze as extended or expansive as this one are unlikely to stay invisible for long. The real risks come later, as the slowdown ripples through listings, loans, and sentiment.<\/p>\n

\u201cIf homes sit for longer due to issues with mortgage loan approval or insurance challenges, delistings or price reductions may increase,\u201d says Jones. \u201cThis is especially relevant if consumer sentiment shifts or anxiety over the shutdown increases, which could convince some buyers to hold off.\u201d<\/p>\n

The real estate industry makes up roughly 18% of California\u2019s $4.1 trillion economy\u2014nearly one-sixth of the entire U.S. GDP. Each median-priced home sale generates about $230,000 in local economic activity and supports three jobs<\/a>, from contractors and appraisers to movers and furniture retailers, according to research from NAR.<\/p>\n

California\u2019s stability may be masking a lag effect\u2014a market that looks steady on the surface but could start showing cracks in the coming weeks. If that happens, the state\u2019s housing slowdown won\u2019t stay local for long.<\/p>\n","protected":false},"excerpt":{"rendered":"The federal shutdown is rattling housing markets in states like Florida, but California\u2019s has barely flinched. \u201cOverall, the…\n","protected":false},"author":2,"featured_media":15243,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[13145,7,9,8,13146,13147,638,13148,13149,5050],"class_list":["post-15242","post","type-post","status-publish","format-standard","has-post-thumbnail","category-california","tag-2025-california-wildfires","tag-california","tag-california-headlines","tag-california-news","tag-data-journalism","tag-flood-insurance","tag-government-shutdown","tag-los-angeles-ca","tag-new-construction","tag-video"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/15242","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=15242"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/15242\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/15243"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=15242"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=15242"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=15242"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}