The U.S. housing recovery that wasn’t?

There has been some noticeable chatter on the newswires this morning about how the U.S. federal government shutdown might affect the so called U.S. housing “recovery.” Much of it points to the fact that mortgage approvals may take longer to process. Apparently staff at the Federal Housing Administration has been reduced by 90% during the shutdown.

Just what kind of housing recovery is this? Is it so flimsy that delays in mortgage approvals might derail it? Granted, U.S. home prices are higher than at any other time since the real estate crash that occurred from 2006-2008. I suppose higher prices are a component of a recovery. But where is the robustness? Remember, the Fed has engaged in $3 trillion of money-printing with one of the major goals being to elevate housing prices. Despite all that, it is surprising to think that economists think that delays in mortgage approvals are a threat.

I remember the last U.S. federal government shutdown. Thinking back, I cannot remember anyone talking about how it might threaten the real estate market directly.   U.S. housing was pretty healthy then, recovering from the early 1990’s dip, and it was still a few years before the Barney Frank / Fannie Mae / Freddie Mac Circus that proclaimed “homes for everyone.” As a result, there was a solid foundation in terms of housing prices and not much froth yet. Housing back then was in a real recovery.

The recent rhetoric of the current “recovery” has suggested that it has been solid, that it is a beacon that will lead the U.S. economy out of its anemic growth trap, and that in some areas prices are “booming.” But what is all of that worth if it only takes a delay in mortgage approvals to get people worried?

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