Federal Government Shutdown Effect on Housing - 12/2/2025

The federal government shutdown recently and thankfully ended but could have long-lasting effects on the ability to provide affordable housing for those who need it most.

The reason is simple: an entity as large as the federal government cannot turn on a dime and cannot ramp up fast enough to reestablish the safety net programs that are so crucial to poor and working-class Americans. 

Sadly, many of these crucial programs were under fire even before the shutdown began. The reduction or delay in government benefits will affect the decisions people have to make today about how they spend their available resources.

During the shutdown many young families burned through whatever savings they had trying to keep their head above water. Others maxed out credit cards to survive. The shutdown opened the door for financial overload for many. Many if not most, are now further from homeownership than they were prior to the shutdown.

Let’s look at some pocketbook facts. 

According to U.S. Bureau of Labor Statistics, the average household's monthly expenses were $6,440 ($77,280 over the entire year) in 2023. That's up from $6,081 ($72,967 over the entire year) in 2022. The average annual income after taxes was $87,869 in 2023, up from $83,195 in 2022.  Even under the best conditions, that leaves little room for error or an unexpected major expense.

Naturally, housing is the largest average expense for most Americans at $2,120 per month, making up 33% of typical spending. That is the absolute highest ratio Americans should spend for their housing to not be considered cost-burdened or “house poor.”

Housing costs are followed in order by transportation, food, personal insurance and healthcare. None of these costs can be looked at in a vacuum. All are interrelated. If, for example, your housing subsidy goes away, it would be extremely difficult to make up for that in other areas. 

Food

On the food front, low-income families may have trouble buying food if safety-net programs stall. 

The SNAP program, which some 42 million Americans rely on for food assistance, has been the subject of much uncertainty — and an escalating legal battle — in recent weeks. The Trump administration said last month that it would suspend SNAP funding in November due to the shutdown, prompting a wide outcry and a series of legal challenges. 

At this point, beneficiaries in some states have gotten their full monthly allocations, while others have gotten partial payments or nothing at all. Reopening the government means restarting SNAP, but it's not clear how quickly full payments will resume since that varies by state. And, many who rely on the program are worried that benefits could be cut again.

 One lesson that both parties should take from the fight is this: You should not play politics with the food assistance program that 42 million people, including about 18,000 in Frederick County, depend on. In the future, SNAP benefits and other federal payments should be specifically exempt from cutoff during a shutdown. Congress should direct the government to continue paying these vital benefits.

Housing

On the housing front, the government shutdown created significant disruptions and delays for various housing services, like loan processing, rental assistance payments, and federal insurance programs. 

For home buyers and sellers, significant delays are expected for government-backed loans from the FHA, VA and USDA. That means big delays for families waiting on mortgages and for developers and homeowners seeking refinancing or rehabilitation funding. First-time buyers that rely on federally backed loans would likely be hit hardest. 

Lenders rely on the IRS for income and tax verification. The shutdown caused major backlogs in this process, delaying loan approvals for conventional loans and those backed by Fannie Mae and Freddie Mac that can’t be reversed quickly.

For renters and homeowners who get federal assistance through programs like the Section 8 Housing Choice Vouchers and Project-Based Rental Assistance, the prolonged shutdown will almost certainly mean funding gaps when reserves are depleted, creating financial uncertainty for public housing agencies and participating landlords. 

Public housing agencies may need to rely on limited operating reserves for daily operations and emergency repairs, potentially forcing them to limit services or delay critical capital improvement projects. 

Homeless assistance grants recipients will almost certainly experience delays due to needing HUD staff approval that will be heavily backlogged thereby disrupting the continuity of services. 

For federal workers, the State of Maryland has taken steps to protect against evictions and foreclosures. This means an involuntarily furloughed federal government employee at risk of eviction or foreclosure can ask the court to temporarily pause the eviction or foreclosure during the shutdown. Federal employees are protected even if they are required to work during a shutdown. 

For everyone else, it has been reported that HUD has restored Tenant-Based Rental Assistance (TBRA) funding for both November and December. But nothing is guaranteed for January because of the shutdown. 

State Resources

The State of Maryland is doing its best to step in during the shutdown and during the time it takes federal programs to ramp up after the shutdown. 

If any homeowners get behind on mortgages, they should connect with a HUD-approved housing counseling agency for free and objective guidance on available options. If foreclosure action has been filed, they should act quickly and consider reaching out to a nonprofit legal services provider.

If evicted from a rental home, reach out to the Access to Counsel in Evictions Program for coordinated legal services.  Maryland has recently passed several tenant protection laws.

Local Resources

Local Continuums of Care offer emergency rental assistance, street outreach, shelter, and permanent housing assistance for individuals at risk of or experiencing homelessness. Contact your community’s coordinated entry hotline or intake point for access to local services.

The city of Frederick recently announced it will provide rental assistance, flexible payments, and other services to federal workers affected by the government shutdown. About 3,500 federal workers live in the city according to the city’s website.

Frederick County has recently approved $2.5 million in aid to organizations helping county residents dealing with the impacts of the federal government shutdown. $1.5 million is allocated to provide grants to nonprofit organizations in the county and an additional $1 million for local food banks to help them meet demand. The county is home to about 12,000 federal workers.