The stories and images coming from Russia’s invasion of Ukraine are sad, disturbing, and angering. First and foremost, we pray for peace in what has been described as the largest military operation in Europe since World War II. With this said, these events have led to several sanctions against Russia by various countries. Naturally, many Americans are wondering what this means for the U.S. economy, including the housing market. We have already seen drops in the stock and cryptocurrency markets. While this typically can affect the luxury real estate market first, a general drop in economic confidence can affect every level of the real estate market.
A fragile economy
With inflation already at 40-year highs prior to Russia’s invasion of Ukraine, it has been increasingly difficult for would-be home buyers to save for a home. Add in the current global unrest and soaring fuel prices, and it is natural for American consumers to feel some jitters. Ultimately, this is prompting many to cut back on spending and economic activities.
With Russia being the second-largest oil producer in the world, the current conflict will most likely roil global energy markets. With this said, we are already seeing rising oil prices with no end in sight. Unfortunately, as the price of oil rises, essentially the price of everything else does as well. From food prices to transportation costs, we can expect some financial pain across the economy.
As for home building, we have already seen significant inflationary and supply-chain pressures impacting the market. According to the National Association of Home Builders, we have seen construction materials rise in price by 22% annually. As an example, lumber prices have risen by 40% over the past 13 months. To add to these pricing pressures, we also expect mortgage rates to continue rising as well. All of these factors will continue to bring to challenges to home buyers and the real estate market as a whole.
At Live South Florida Realty, Inc. we have assisted many clients with their real estate needs. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!