This week’s issue presented by Ridge Lending Group
What happened…
Congress can’t agree on a budget. If they don’t pass one, 31% of federal employees get sent home. IRS clerks, HUD staff, and flood insurance desks all go dark. Real estate closings stall.
Takeaways…
$1.9B/day: That’s the cost of a shutdown to the U.S. economy.
31% furloughed: These aren’t TSA or soldiers—it’s the paper-pushers your mortgage needs.
Oct 1 deadline: Miss it, and housing programs freeze overnight.
18 days average: Past shutdowns last weeks, not days. Your lender clock doesn’t stop ticking.
Explain Like I’m 12…
It’s like a giant grocery store where the cashiers all walk out. Shelves are full, but no one can check you out.
What this releases…
Closings delayed: Watch for sellers to panic as deals stall.
Market noise: Expect wild takes—some call it “budget discipline,” others scream “default.”
Why it matters…
Buyers pay: Locked-rate approvals expire if IRS or HUD can’t sign off.
Banks sweat: No federal backstop data means credit checks get riskier.
Backroom breakdown…
Both parties win airtime, but Main Street eats the bill. The quiet signal: politicians are fine using your mortgage as collateral in their brawl.
Real estate angle…
If you’re under contract, a shutdown could stall your closing—especially with IRS transcripts or FHA loans. Investors relying on federally backed programs might get iced. Private money and creative finance suddenly look smarter… and more practical.
Move or miss?
Lock in alternative funding before Oct 1. If banks freeze, you’ll be the buyer who still closes. Best move: secure funding (RidgeLendingGroup.com) or get tactical support (CashFlowSavvy.com) before shutdown.
Lurking in the Shadows:
👟 Fed Cuts Rates—But Mortgages Don’t Budge
The Fed shaved 0.25% off its benchmark, the first cut in a year. Bond traders yawned. Mortgage rates barely moved.
💡 Why you should care: Cheap money headlines don’t matter if your 30-year loan stays stuck near 6.5%.
👟 Trump Floats National Housing Emergency
Treasury Secretary Bessent said the White House may declare a “national housing emergency” this fall. Ideas range from zoning overrides to tariff breaks on lumber.
💡 Why you should care: If D.C. meddles directly in supply and prices, investors face both new deals and new risks.
👟 Ray Dalio: “Very, Very Dark” Times Ahead
Dalio says the U.S. is hitting the end of an 80-year debt cycle, warning of “very, very dark” years. He sees money printing and political fracture as red flags.
💡 Why you should care: Late-cycle chaos often drives capital toward hard assets—but also invites higher taxes and controls.
On The Radar…
📈 Griffin Sees Inflation Coming Back: Citadel’s Ken Griffin warns tariffs mean 3% inflation through in 2026.
💹 GDP Surges to 3.8% Growth: Q2 was the fastest in two years; strong consumers mean Fed cuts could stall.
⛽ Oil Jumps to $69 a Barrel: A surprise 607,000-barrel drawdown reignites inflation fears, pushing up mortgage and fuel costs.
🏘 Housing Recovery Pushed to 2027: Existing sales stuck near 4M a year; affordability freeze drags out far longer than hoped.
🏦 Pimco’s “Mortgage Twist” Idea: Redirecting $18B/month into MBS could shave points off 30-year loans if the Fed bites.
🏢 Office Vacancies Hit 20.7%: That’s 902M sq. ft.—equal to 300 Empire State Buildings sitting empty, straining lenders and cities.
🖇 The Connection
Shutdowns stall closings. The Fed trims rates but mortgages stick near 6.5%. The White House floats a “housing emergency” while Dalio warns of an 80-year cycle cracking. The through-line: Washington keeps pulling levers, but every twist makes the housing vise tighter. Investors who sidestep the system—using private capital or creative finance—move first.
#️Number of the Week
902 million square feet of empty U.S. office space—equal to 300 Empire State Buildings sitting dark.
Punchline: That’s not “remote work.” That’s a ghost town with better Wi-Fi.
🎯 The Hit List!
✅ Watch: The Fed cut 0.25%, but mortgages stayed near 6.5%. Don’t bet on cheap debt yet.
✅ Hedge: Oil at $69/barrel risks reigniting inflation. Lock in costs or tilt toward energy-linked assets.
✅ Track: GDP revised to 3.8% growth—a hot economy delays deeper cuts. Expect “higher for longer.”
✅ Test: Trump’s “housing emergency” talk could mean zoning overrides. Scout land deals before rules shift.
✅ Avoid: Office vacancies hit 20.7%. Lenders are spooked—don’t be the last bagholder.
✅ Explore: Pimco’s “Mortgage Twist” idea highlights spreads, not just Fed Funds. Creative financing wins while rates stick.
🚪 Closer
If 902 million square feet are empty, we don’t need new offices—just better excuses to not show up.
