With talks of sequestration resuming, we can expect to see cuts that can wound the recovering real estate market.
Sequestration, which is an automatic, across-the-board series of cuts to government funding that adds up to $1.2 trillion over the next 10 years, according to CNN. Specifically, we can expect split 50-50 cuts between the defense and domestic agencies funding.
The arrangement was part of the U.S. attempt to handle the national debt crisis, which is at $16 trillion right now.
Congress had pushed the deadline to March 1 after a deal made from the fiscal cliff last session. Now a solution has to be reached, or everyone will feel the deep cuts.
In an interview with WAVY 10, homeowners like Merry Emil of West Virginia had her home on the market for eight months with no movement.
"We don't have a buyer, we don't have a renter... We're taking a big chance," Emil said. "It's just generally going to be harder and harder to sell because of the tightening of the lending and the less people who can afford to buy."
According to Pat Steele, chair of the Hampton Roads Realtors Association, in an interview with 10, the real estate market is seeing a good turn-around from the past few months and the sequestration could have impacts on jobs, incomes and ultimately a person who wants to buy a home.
The housing market is at risk. The Federal Housing Administration (FHA) reportedly guaranteed 23 percent of all mortgages last year, according to Chicago Agent Magazine; but because of sequestration they can expect job cuts and ultimately less processing of loans, refinances and properties in major distress--all of which need attention for a recovering housing market
More recently, families who were affected by Superstorm Sandy or today's homeless are going to face deep cuts to their programs and aid, according to Shaun Donovan, secretary of the Department of Housing and Urban Development.
The market and the economy is also in for a confidence crusher. Chicago Agent argued the most important impact will be felt in the consumer's confidence level, which has come a long way since the crisis, and reverting to another blow will only deter home purchases and in due course send a shock wave to homebuyers and sellers across the country.
