Russia has invaded Ukraine. While some people appear lost, almost in shock, others are in fear of disaster and market crash. February’s market report for Northern Virginia can’t be explained without looking at this global tragedy. Many are waiting to see what happens next. The U.S. along with Japan, Australia, and Canada have imposed sanctions on Russia. The question is, “how will Russia respond?” This article looks at how the housing market is affected by Russia’s invasion of Ukraine.
Before the invasion, mortgage interest rates were already increased and expected to keep rising. Inventory of homes for sale was already low and inflation was the hot topic. Now, since the invasion, real estate professionals are faced with questions about what to expect.
SHORT TERM EFFECTS OF INVASION
In the short term, housing remains in short supply. Homes now for sale are sure to go fast and demand top dollar. While the wild price hikes are leveling off, home prices continue to rise. So the seller’s market will continue undisturbed for the time being.
Sellers who are on the fence on whether to buy or sell may be afraid to make a move and want to wait to see what happens next. How will Russia respond to the sanctions? Will there be a diplomatic resolution?
BUYERS FACE PROBLEMS
Buyers who need financing face struggle as mortgage interest rates continue to rise and inflation increases. Banks may also tighten up on regulations which may make housing unattainable for many interested buyers. Still, those who can afford to buy will wait to see if they can hold out for a “deal”.
INVESTORS IN THE HOUSING MARKET
Investors, on the other hand, have the financial backing and availability to credit. As long as the stock market remains volatile, investors will look for more stable assets. Real estate is traditionally a more “sure” investment. Some reports are that investors bought record number of homes in 2021.
So for now, it is a watch and wait approach to the housing market. There is much speculation that this may be the cause of the “bubble bursting” and “market crash”. In my view, it’s still too early to tell. Regardless, the housing market is affected by Russia’s invasion.
Please leave a comment and let me know if you think this is the start of the market crash
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