5 States Where Real Estate Is King and A Government Shutdown Could Hit Hard

This government shutdown is no minor disruption, it’s a direct hit to the heart of several state economies, especially those where real estate is the engine driving growth.

Now in its third week, the shutdown is costing about $400 million every single day. That’s not chump change. Nearly a million federal employees are furloughed, and another 700,000 are working without pay; serious numbers with serious consequences.

HUD was forced to lay off hundreds of employees last Friday, leaving crucial fair housing and public housing offices severely understaffed. And on the lending side? Mortgage processing has slowed to a crawl thanks to staffing shortages at the IRS, FHA, and VA. The USDA? They’ve hit pause on all loan applications.

If you’re trying to move property, expect delays. Virginia and Maryland are taking a big hit due to their concentration of federal jobs and contractors, but five other states are also facing major challenges.

WalletHub’s recent analysis highlights Florida, Delaware, Arizona, Hawaii, and Nevada as the most vulnerable, simply because real estate is such a massive part of their economies.

Take Florida, for example: real estate accounted for $381.4 billion, over 24% of its gross state product in 2023. Disrupt mortgage access there, and you risk a ripple effect that throws off the entire national housing market. Even a modest decline in buyer activity in Florida could skew national sales and inventory numbers.

Hawaii’s in a similar spot, as real estate is nearly 23% of its economy, equaling $24.8 billion last year. That places it right behind Florida in terms of exposure to shutdown fallout.

As for Washington, DC, the impact there is unique. Over a quarter of all jobs in the District are tied to the federal government. So, when government operations stall, DC’s entire economy takes a hit. Real estate makes up a smaller proportion of DC’s economy, but layoffs and uncertainty are already prompting some government employees to put homes on the market and leave the area.

Looking ahead, the longer the shutdown drags on, the greater the risk to the housing sector, particularly in these real estate-dependent states. Congresswoman Maxine Waters has already condemned the effects of HUD layoffs, warning that vital community programs and services are now at risk.

Every day this shutdown continues, the pressure on the real estate market intensifies. For states where property is king, the stakes couldn’t be higher—and the timeline for relief remains anyone’s guess.