4 min read
Key takeaways
- Federal government shutdowns occur periodically when Congress fails to pass funding legislation. The longer the shutdown, the greater the economic impact.
- Shutdowns can pressure interest rates, complicating refinancing for real estate loans.
- Multifamily housing—especially affordable—typically experiences the greatest impact through delays in government housing programs and rental assistance payments.
Congress ended a 43-day government shutdown on Nov. 13, 2025—the longest in in U.S. history. The continuing resolution passed that day funds the federal government only through Jan. 30, 2026, making another shutdown possible in the near term.
Whether shutdowns last days or weeks, their impact on commercial real estate—particularly multifamily—follows some patterns. Understanding these patterns can help you prepare.
What happens during a government shut down
The federal government operates on a fiscal year beginning Oct. 1. When Congress hasn’t passed appropriations bills to fund federal operations by that date, it typically passes a continuing resolution (CR) to maintain current funding levels temporarily.
A government shutdown occurs when Congress fails to pass either appropriations bills or a CR before funding expires. Without enacted funding, federal departments and agencies halt all nonessential work and may shut down entire organizations.
“Government institutions and personnel deemed essential are exempted, meaning they will continue to work despite the shutdown,” said Ginger Chambless, Head of Market Insights for Commercial Banking at J.P. Morgan.
The government won’t process payroll during the shutdown.
The likelihood of a government shutdown
“The fight is far from over,” said Tom LaSalvia, Head of Commercial Real Estate Economics at Moody’s Analytics. Given the current political climate, “health care will again be a sticking point unless a compromise bill is voted on soon.”
However, “headwinds from the recent shutdown, as well as the midterm elections, could give lawmakers a greater sense of urgency to come together more quickly,” Chambless said.
LaSalvia noted additional pressure. “Combined with an economic slowdown, the labor market is either in a recession or on the brink of one—job growth has been nonexistent since April,” he said. Neither party wants to risk blame for worsening that situation.
Historically, when shutdowns appear imminent, Congress often passes another stopgap CR to temporarily extend funding and delay the confrontation.
Why the length of a government shutdown matters
Shutdowns can last days or weeks. “The impact to economic growth and market sentiment tends to grow the longer the shutdown lasts,” Chambless said.
For example, a two-day 2018 shutdown had minimal economic effect, while the 43-day shutdown in 2025 had significant impacts, including:
- An estimated 1.4 million federal employees furloughed or working without pay
- Delays in publishing official economic data, including the U.S. jobs report and the Consumer Price Index—creating a challenging decision-making environment
- The Congressional Budget Office estimated the GDP growth rate in Q4 2025 would be reduced by 1.5%, with a 2.2% increase in Q1 2026
How a shutdown could impact commercial real estate
A government shutdown’s impact on commercial real estate varies, but the current interest rate environment creates different dynamics than previous shutdowns.
“A shutdown—a show of further government dysfunction—could harm the U.S. government’s credibility and put pressure on government debt,” LaSalvia said. “Any additional shock to interest rates amplifies the already-difficult refinancing situations for many commercial real estate loans.”
“It’s difficult to predict how interest rates might respond to a government shutdown as prevailing economic and market conditions will also factor in,” Chambless said. “On one hand, perceived weakness in U.S. governance could drive interest rates higher, while volatile market conditions could prompt a flight to quality, pushing Treasury yields lower. 10-year Treasury yields traded in a relatively tight 20 basis point range during the six-week government shutdown in 2025.”
Within the industry, the government plays a greater role in multifamily housing than other sectors. “Low Income Housing Tax Credit, Section 8 and Federal Housing Administration programs are all at risk, but mostly in the form of delays rather than long-lasting impacts,” LaSalvia said.
Government assistance may also be delayed, affecting rental payments. Affordable housing faces the greatest impact, but postponed payments can also create problems for workforce and market-rate rental owners, depending on their resident mix.
How multifamily property owners can prepare for a shutdown
Multifamily investors can take steps to prepare for potential shutdowns, including:
- Assess exposure: While the specific agencies and services affected by a shutdown vary depending on funding legislation, past shutdowns serve as a guide. Incorporate shutdown scenarios into your cash positioning and forecasting process to estimate potential liquidity needs.
- Build reserves: Multifamily operators—especially affordable housing providers that rely on government assistance programs for rent payments—should maintain reserves to cover at least six months of debts and operating expenses.
- Streamline operations: Make your processes more efficient and optimize cash before and during a shutdown. Tactics can range from creating economies of scale to choosing payment methods that maximize liquidity.
A government shutdown would only heighten market uncertainty. Find out why multifamily marketing is so important in and up-and-down economy.
JPMorgan Chase Bank, N.A. Member FDIC. Visit jpmorgan.com/commercial-banking/legal-disclaimer for disclosures and disclaimers related to this content.
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