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March Madness in the Housing Market - March 7, 2013

As the collegiate basketball season is coming to an end the 75th annual March Madness has once again arrived. For many collegiate athletes this may be the last season they play as a student. For those that are graduating, they have been able to reap the benefits of being sheltered within a college environment for the entirety of the recession. Now with graduation coming ever closer, these students will start to be exposed more and more to the market.

Since the housing market crashed in 2009, it has slowly been on the rise. Case-Shiller notes that the 20-City House Price Index for December shows consistent gains for housing prices in almost all major metro areas. Also the S&P Index Committee released information showing a 10% rise in nationwide property sales for last year. This information leads the notion that the housing market is on the rise. With the sequester going into effect on March 1st however, what does this mean to the housing market?

The sequester launches the initiation of $85 billion in spending cuts. These cuts could have direct impacts in the housing market starting with the Department of Housing and Urban Development. The cut backs may inhibit funding for low-income housing. Also foreclosure prevention aid and counseling services will be negatively affected as well as the Housing Choice Voucher program which prevents homelessness. Thankfully FHA loans will be supported, although timeframes could be impacted as furlough days will reduce the processing of loans.

It is possible to believe that the sequester could have an adverse affect on the housing market at a time where the housing market has been on the rise.  The uncertainty is how much will the sequester truly affect the market. We will only truly be able to see as the longer term impact of spending cuts become a reality. Either way March looks like it has started with a little bit of Madness.

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