Although the government’s across-the-board budget cuts (aka “the sequester”) officially went into effect March 1, most of the effects won’t be seen for a while. It’s the government, after all, and like any monstrous bureaucracy it takes a while to get things going.
As Major General Karen Dyson — the U.S. Army’s budget director — explained to NPR, “It really sort of manifests itself over time.”
That’s true of the cuts themselves; the direct effects probably won’t start for several months, for the most part. But the indirect effects are already here — just ask Realtors in the Hampton Roads area, which relies heavily on government spending for its economy.
Members of the military won’t see their pay affected, but all those civilian employees are looking at something close to a 20 percent pay cut. That means they’re holding off (among other things) home buying.
The Federal Times, for example, has a story about federal employees preparing for the cuts on the horizon. You can bet that “looking for a new house” isn’t on the table for any of them. They’re also concerned about missing bill payments because of the cuts, which could mean losing their security clearances. and thus their jobs.
And the ripple effects? Hard to tell.
Meanwhile, Housing Wire has a piece, “Sequester may reverse housing improvement, initializing greater risks” that explains some other issues the sequester’s indiscriminate cuts will have.
And NAR points out in its Washington Report blog that as the cuts begin to take effect, “FHA and RHS Home Loans Could Be Slowed.” The loans will still be made, but “furlough days could impact endorsement/claim timeframes” for FHA loans. In other words, processing will be slowed by having an effectively smaller workforce on hand.
This isn’t like a government shutdown, where effects are immediate and hard. The sequester’s effects will take time to be felt. In many cases it will just be a slowdown in services, and other things that might not be so obvious. (How can you tell if the long line at the airport is any longer because of the cuts? You can’t.)
Of course, there are people and programs that will be affected directly (parents will kids in Head Start, college students who rely on work-study jobs, poor families who need assistance with vaccines for their kids, and a few others).
For the most part, despite the Obama Administration’s predictions, this won’t be a huge disaster. (Except maybe for the folks in the paragraph above.) But it also won’t be something that we’ll be able to ignore — just ask the folks in Hampton Roads.
The real estate market will certainly feel it, but how bad it will actually be. well, that’s anyone’s guess.
A bit more reading, for those so inclined:
- The Washington Post’s “The Sequester: Absolutely everything you could possibly need to know, in one FAQ“
- Slate also has one: “But What Do the Cuts Mean For Me? A Sequester FAQ For the Rest of Us.”
- The White House’s “Impact of March 1st Cuts on Middle Class Families, Jobs and Economic Security: Virginia“
- Military.com has Q&As about the effect on armed forces personnel.