Housing largely dodged a bullet on the government shut down that went into effect October 1. The pending default, however, is an entirely different matter. As the October 17 default deadline nears, knuckles in the housing industry are turning white.
All the progress that the housing recovery has achieved since the crashed could be erased overnight if the U.S. defaults on its debts, according to the president of the National Association of REALTORS®. But Gary Thomas is not the only housing leader raising alarms and the debt default clock ticks down.
In testimony before the Senate Committee on Banking, Housing and Urban Affairs, NAR president Gary Thomas said that unless the debt ceiling is raised in “a timely manner,” the country would face a recession that would wipe out the recent progress made in home prices, home sales and new residential construction.
Robert Dietz, Vice President for Tax and Market Analysis for the National Association of Homebuilders, says the primary effect of a default or downgrade would be increased uncertainty. “Home buyers are making purchase of a capital asset that they will own, on average, for ten years. Given other sources of uncertainty, particularly from the labor market, the largest impact from a failure to reach a deal that increases the debt ceiling would be to further increase concern and anxiety of families attempting to make long-term economic decisions.
