California Housing During the Shutdown: Steady, With Cracks Forming
California Market Update
California Housing Is Holding Steady — For Now
What the federal shutdown means for buyers, sellers, and builders in the Golden State
California has a reputation for resiliency, and so far it is showing. While some states are feeling the sting of the federal shutdown, California housing data remains steady: new listings are up year over year, time on market is holding, and inventory growth is decelerating in line with recent trends.
Why California Is Holding Strong
Most California buyers use conforming loans, which are not disrupted by the shutdown. Meanwhile, cash and jumbo buyers remain active in high-priced metros like Los Angeles, San Francisco, and San Jose. Lenders can also keep approvals moving because the IRS Income Verification Express Service (IVES) is still operating, so many transactions continue with normal timelines.
Early Strain for Government-Backed Loans
Under the surface, there is cooling among first-time buyers relying on FHA or USDA financing. These programs depend on federal staffing and approvals, now limited during the shutdown. Sellers are adapting by allowing longer escrows or modest price adjustments to keep deals moving.
Builders Are Feeling the Delays
Developers report slower permitting and inspections where federal coordination is needed. Minor delays ripple across projects, especially multiunit builds. Some builders are already incurring extra costs simply waiting on approvals and routine infrastructure sign-offs.
Hidden Flood Risk After Wildfires
With the National Flood Insurance Program paused, risk is elevated in wildfire-scarred areas where burned hillsides increase flood exposure for years. Without new or renewed NFIP policies, closings in higher-risk zones can be delayed or stopped until coverage resumes.
The Lag Effect
Today looks calm, but a prolonged shutdown can show up later as longer days on market, more price reductions, and softer buyer sentiment. Housing is a major engine of California's economy, so any slowdown has wide local impacts.
Bottom line: California remains resilient, but resilience has limits. Staying proactive and flexible will matter if the shutdown persists.
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Sources: Realtor.com, NAR, HUD. IVES service remains operational during the shutdown.