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26 MAR

Russia & Ukraine Effects on the South Florida Real Estate Market

Russia & Ukraine Effects on the South Florida Real Estate Market

How will the war in Ukraine effect our local Real Estate market?  The answer is that it’s too early to tell.  However, it’s a significant worldwide event and usually those have an effect.

When Covid 19 occurred, no one really knew what was going to happen.  The nearly 10 Trillion dollars of stimulus that happened was to keep our economy afloat.  The money not only gave people cash, but it also forced savings.  Working remotely let people decide if they wanted to relocate.  People made life decisions to move.  Interest rates were also kept low which made moving affordable. Foreclosures were held at bay.  Then inventory shortages of material caused prices to rise. A housing lack of inventory amount of land throughout the country was finally realized.  A lack of land in our particular market also finally caught up with the marketplace as the pioneer limitless amount of land ended.

The Russia situation already has had some effects.  For oligarchs, Florida and the United States in general is not going to be a safe place to invest.  That money might go to places like Dubai or China although political pressure might cause those monies to move elsewhere and prices could rise more if we get in trade wars with other countries.  On the other hand, people in surrounding countries in the Baltics and Europe might want to hedge a bet and have a residence in the United States.  I wouldn’t be surprised to see lots of movement from Europe to the United States.  That could cause more demand and increase prices more.

Here is an interview we did with Axios on how cause and effect might play out with relocation to South Florida

Inflation which was already here is now going to have a bigger impact.  It’s not just oil but other products like food and other supply chains.  Interest rates will have to go up.  The interest rate effect always has an impact on the market, especially a trickle up effect.  Someone who can afford to purchase a $400,000 townhome home in Maryland, may only qualify now for $350,000.  Taking that buyer out of the market might cause that easy $400,000 sale not to happen so fast.  If that sale doesn’t happen than the seller of the $400,000 home can’t buy their million dollar home.  And the million dollar homeowner then won’t use the proceeds of their sale to make their cash purchase right here locally.

Inflation is also occurring faster than wages are rising.  That will mean less purchasing power and will have an impact on consumer spending.

Hopefully the war will end fast but this is a big one and oftentimes it’s Russian Roulette in how these things turn out and how it affects the overall marketplace.

My take is that the market is so strong and there are so many buyers waiting in the wings, that a dent here and a dent there, won’t derail it.  However, the extra bidding war “umph” that occurs because of how extreme the market is does have some risk of dissipating if there are enough dents.

Posted in Open House Blog, Real Estate Tips on March 26, 2022 at 10:11 am.

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