How The Ukraine War Will Affect Real Estate

Performance Property Real Estate Question

Q: How do you think the invasion of Ukraine will affect real estate? Peter, Englewood, NJ

A: Any war, especially one where civilians are explicitly targeted brings unfortunate death, destruction and displacement. Interest rates often go down in times of uncertainty, like they did during the initial Covid pandemic lockdowns because investors usually place more capital into safer assets like bonds. This would lead to declining mortgage rates or at a minimum a slowing of mortgage rate increases. It is also possible that a prolonged war in Ukraine may trigger a recession in the US although it’s too early to tell at this point how the conflict will last or when the conflict will end. During a recession, there are usually less home buyers than when the economy is booming, so houses stay on the market longer. This normally makes sellers more likely to lower their listing prices to make their home easier to sell. However, home inventory levels are so low right now, there would have to be an enormous drop in housing demand for homes to sit on the market long enough for home sellers to lower their asking prices. Thanks for your question, Peter.

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