How Could the War in Ukraine Affect The National and Local Real Estate Market?
Nearly everyone is keeping an eye on what’s happening in Ukraine, hoping it will end soon and without too much loss of life.
It may feel trivial and even selfish to wonder how it will affect the National and Local real estate markets, but it’s a valid concern if you’re in the process of selling or buying a house, or simply thinking of doing either.
While it’s impossible to predict exact impacts on the entire US real estate market, let alone local markets, it’s possible to speculate on a few broad potentials:
Whenever there are big question marks due to geopolitical events like this, people may hold off on selling or buying a house because they simply aren’t sure of the impacts it may have on them directly or indirectly. This could show in the form of buyers putting a pause on their home search, or sellers taking their house off the market.
As of now there haven't been significant changes in our local market conditions, however there are a few properties which are staying on the market a while longer, rather than selling within hours or days. There are still a lot more active buyers than there are houses for sale, but buyers may be losing some of their excitement depending on what type of property and it's location.
Luxury and Secondary Markets Could Take a Hit
The stock market and investment accounts are a lot more volatile during a major conflict. One day they are down considerably, then they bounce back only to take another dip. Since luxury and secondary homes are more often funded by tapping into investment accounts, it could put a damper on the higher end home sales.
Rise in Construction Costs
Transportation costs have already been rising due to oil prices, but this conflict could lead to even less supply and higher prices, which would impact the transportation costs of building materials even more than the supply chain issue has already affected costs. Therefore, new construction homes could see more of a hike in cost and delay, more than we've already experienced lately.
Mortgage rates are the X-factor. While there’s no guarantee it will last, mortgage rates actually came down a bit and could come down even more, or stabilize, rather than continue rising like they had been in recent weeks. This is likely due to investors looking for a safer place to put their money in such a volatile financial market, so they often invest in mortgage-backed securities, bonds and U.S. Treasury notes which affect mortgage rates.
Considering how unpredictably the market reacted (and how much it surged) during the COVID pandemic, there’s a good chance the Chelan real estate market will continue along much like it has been for the past couple of years — especially if mortgage interest rates stop rising, or even go down again.
Low mortgage rates will likely lead to buyers who are still willing and anxious to buy. Couple that with the low number of houses for sale, and it paints a picture of an overall US real estate market not noticeably affected by the crisis in Ukraine.
As always, there’s no crystal ball in real estate, and it’s such an individual decision affected by one’s personal situation and local market. If you’re concerned about whether selling your house or buying a house makes sense for you, speak to your financial advisor our reach out to our team with your questions!