Real Estate
Government Shutdown Stalls Real Estate in 5 States
The federal government shutdown is stretching into its third week, and its effects are already rippling through the U.S. real estate industry. As key agencies scale back or furlough employees, critical housing services are slowing down. This situation is causing delays, financial stress, and growing uncertainty for buyers, sellers, and developers. Five states are expected to feel the greatest strain, according to WalletHub are: Florida, Delaware, Arizona, Hawaii, and Nevada. These states rely heavily on real estate as a major driver of their economies, so any slowdown in the housing market hits them harder. In Florida, for example, real estate made up roughly a quarter of the state’s economic activity last year. With mortgage processing and insurance programs affected, these states could see a sharp decline in real estate transactions if the shutdown continues. Source: WalletHub Federal Services That Are Slowing Down Several government agencies that support housing transactions are now working with limited staff or no funding. This means routine processes that buyers and lenders depend on are being delayed or paused altogether. (MORE NEWS: Silver Prices Hit Record High as Demand Surges and Supplies Tighten) Key areas affected include: Mortgage processing delays. Many loan approvals depend on income and tax verification from the IRS, but with fewer employees available, these checks are taking longer. This affects both federally backed and conventional loans. Flood insurance on hold. The National Flood Insurance Program has been suspended, leaving thousands of homebuyers unable to close deals in flood-prone areas. Lenders typically require flood coverage before finalizing a mortgage, so even short interruptions can derail pending sales. Permitting and development reviews. Federal offices responsible for environmental reviews, zoning approvals, and building inspections are operating at reduced capacity. This creates bottlenecks for developers and construction projects already under tight timelines. Compass Chief Evangelist Leonard Steinberg told HousingWire: “The big fear will always be the impact of mortgages. That’s because 90% of mortgages do run through Fannie Mae and Freddie Mac. While they aren’t directly impacted by government funding, they are indirectly impacted by IRS approvals and clearances. Each of these disruptions adds friction to an already complex housing market. When approvals or inspections stop, deals can stall, costs increase, and confidence drops. How the Market Is Reacting Beyond the immediate logistical delays, the shutdown is hurting consumer confidence. Buyers and sellers are growing cautious as they watch interest rates, government negotiations, and market trends with uncertainty. When consumers hesitate, transactions slow, and that cooling effect spreads quickly through the economy. The housing sector fuels about one-fifth of U.S. economic output, so any slowdown matters. In regions with heavy federal employment, such as Washington, D.C., the impact is even deeper. Unpaid federal workers may need to sell homes, delay purchases, or fall behind on mortgages. The longer the shutdown lasts, the more those local markets will weaken. Even in areas less dependent on federal programs, the loss of momentum has psychological effects. Buyers postpone plans, sellers hold off listing properties, and developers delay projects until the government reopens. Consequences for Buyers, Sellers, and Builders The effects of the shutdown can be seen across multiple parts of the real estate ecosystem. Stalled closings. Thousands of home purchases are on hold each day due to missing paperwork or halted insurance. In flood-exposed regions, many buyers cannot finalize sales at all until federal programs restart. Buyer frustration. Delays are causing some buyers to walk away entirely, especially when sellers refuse to extend deadlines. This can lead to lost deposits or failed contracts. Builder setbacks. Developers who rely on timely approvals or inspections now face mounting costs. Financing windows can close, and construction schedules can unravel. Smaller builders with tighter budgets are especially vulnerable. Regional differences. Some markets may fare better if they depend less on federal services or if local lenders step in with alternative financing. However, high-risk and high-cost areas like Florida and Hawaii face more disruption because they depend heavily on federal flood insurance and housing programs. What Real Estate Professionals Can Do Even in a crisis, proactive steps can limit the damage. Real estate agents, lenders, and developers are adapting to keep deals alive while government systems remain frozen. Here are practical strategies professionals are using to manage the uncertainty: Communicate early and often. Agents and lenders are keeping clients informed about possible delays so buyers know what to expect. Honest, timely updates prevent panic and preserve trust. Add flexibility to contracts. Extending closing dates, allowing for contingencies, or including clauses that account for shutdown-related delays can protect both parties from unexpected fallout. Seek alternative options. When federal loans or insurance are unavailable, buyers may explore private lenders or alternative flood insurance providers. These options can keep deals moving until programs resume. Focus on less affected transactions. Real estate professionals may temporarily shift attention to commercial properties or cash-based deals that don’t rely on government approvals. Stay informed. Because the situation changes daily, agents and developers are tracking legislative updates closely. The faster Congress reaches a funding deal, the quicker markets can recover. The Broader Economic Picture While most attention is on homebuyers and sellers, the broader economy also feels the shock. Fewer home sales mean less spending on furniture, appliances, renovations, and related services. These secondary effects can weigh on local businesses, contractors, and even state tax revenues. (MORE NEWS: China’s Rare Earth Clampdown Threatens U.S. Tech, Defense) In some markets, the slowdown could lead to temporary dips in home prices. That might sound like good news for buyers, but reduced lending availability offsets any savings. For most Americans, the housing slowdown simply adds more uncertainty to an already challenging market. Still, history offers a measure of comfort. Past shutdowns have caused short-term disruptions but not lasting damage. Once the government reopens and agencies resume operations, transactions typically rebound quickly as backlogged approvals clear. Confidence tends to return once people see progress. A Path Toward Recovery Although the current government shutdown has disrupted critical housing processes, it doesn’t spell long-term disaster for real estate….
Insurance Drones: Hidden Home Inspections Spark Backlash
Insurers now use drones to inspect homes. Homeowners often don’t know until they get a notice from the insurance company. This shift is raising alarm. It affects coverage and threatens trust. Privacy Concerns for Homeowners Many policyholders feel surprised. They receive aerial photos that often come without explanation. Many people are calling it invasive. For example, Lynne Schueler of Massachusetts woke one morning. She found an email with a photo showing overhanging branches. It came with a six-week deadline to trim the tree or risk losing her coverage. She had no claims in twelve years. Still, she paid $1,200 to trim the branches because she had to keep her insurance. She was also concerned about the privacy aspect: “It was very invasive, because they had taken a picture of my house without me knowing, which was really kind of crazy… They were cancelling my insurance. They had showed a drone coming over the house at some point and there was some tree branches hovering over my house that they wanted removed. I wasn’t home because my car wasn’t in the driveway.” Insurance companies are now using drones to secretly fly over and photograph the homes they insure without the homeowners knowing. The images are then fed into AI systems that flag potential risks or maintenance issues. People are suddenly losing coverage after being told, “We… pic.twitter.com/DXYnsW1zyT — Shadow of Ezra (@ShadowofEzra) August 25, 2025 How Insurers Use Drone Data The use of drones is growing fast. Insurers use aerial images to flag mold, roof damage, or debris. They rely on algorithms and AI to analyze what they see. (MORE NEWS: Popular Amazon Prime Program Ending Oct. 1) Critics call this surveillance. They worry about errors. Sometimes data is outdated or flawed. Mike Arman in Florida learned this the hard way. His insurer flagged his roof as being in a state of deterioration. The image looked ancient—like a satellite photo from 1936. He had no claims in 52 years, yet the company refused an in-person inspection. They dropped him anyway. That is not rare. In California, a homeowner claimed her insurer canceled her after drone images captured yard clutter. She had been insured with them for 40 years. The insurer denied using drones, but used aerial imagery. The homeowner requested the images but never got them. These stories show a troubling pattern. Homeowners feel blindsided, while insurers defend efficiency. Trust erodes in the middle. Lawmakers Begin to Push Back This trend is getting attention from lawmakers, and regulatory responses are emerging. In Massachusetts, State Representative David LeBoeuf introduced Bill H.1242, which would hold insurance companies to a higher standard, allowing homeowners to file appeals and fix the issues. He says the bill: “Gives you the right, if your homeowner’s insurance policy is not renewed because of the use of an aerial image, to actually see that image, know when it was taken, to have the defects identified, and to create an appeals and cure process.” In California, lawmakers also acted. They want insurers to notify policyholders BEFORE using aerial images. They must also show the images afterward. Still, critics argue that these measures are insufficient. Consumer groups argue for stronger rules. They suggest insurers automatically send date-stamped photos and allow corrections, reducing unfair cancellations. Why Insurers Defend Drone Use Why are insurers doing this? The answer is efficiency. Drones and satellites enable insurers to inspect homes quickly. They can monitor thousands of properties on a tight budget. They argue this keeps premiums lower for everyone. (MORE NEWS: “Rich Dad, Poor Dad” by Robert Kiyosaki: A Book Review) Plus, after disasters, aerial data is critical. Drones can assess damage safely when it’s unsafe for humans. Insurers say this speeds recovery. But privacy advocates push back. They warn of false flags. Debris might look like damage. Shadows might mimic cracks. Yet homeowners may not have the opportunity to contest those errors. What Homeowners Can Do So, what can homeowners do? Here are some suggestions to protect your home: Maintain your property well Trim branches Remove debris Keep the roof clean Fix visible issues quickly Power wash areas to keep the exterior of your home clean Document your upkeep Take date-stamped photos Save receipts Stay ready to show proof Contact your agent proactively to ask questions Ask if aerial inspections are used Find out what flags to watch for If you get a nonrenewal notice, ask to see the image and demand to know the date and what triggered the alert. Request a chance to correct any issues. Finally, check your state laws. Many states require advance notice before cancellation and may also require justification. You may have a right to appeal. It is your responsibility to ask questions and maintain your home. The Future of Drone Surveillance in Insurance In short, the use of drones in insurance is a trend that is unlikely to end anytime soon. They boost efficiency, but they also pose risks if insurance companies remove the human element from decision-making. They may threaten coverage without warning. Homeowners need transparency and protection from unfair practices. Lawmakers and regulators are slowly responding, but that process can take time. That is why privacy laws in your state matter. Strong rules can protect homeowners from sudden cancellations. They can force insurers to share images, prove accuracy, and allow an appeal. Pushing for privacy laws at the state level gives homeowners a shield. It keeps insurers accountable. It ensures aerial technology does not replace fairness. To stay covered, stay alert. Maintain your home and know your rights. Keep records, ask questions, and press for stronger privacy protections. The drone trend may grow, but strong laws can keep it from taking away your peace of mind. Forget the narrative. Reject the script. Share what matters. At The Modern Memo, we call it like it is — no filter, no apology, no corporate leash. If you’re tired of being lied to, manipulated, or ignored, amplify the truth. One share at a time, we dismantle the media machine…