Will the Ukraine crisis impact the real estate sector?

In addition to our worries about how the ongoing crisis in Ukraine is resulting in mounting loss of lives and stoking fears of a broader conflict, we have worries closer to home, about how the situation is impacting our economy.

The Ukraine crisis began just as the U.S. was beginning cautious steps toward post-pandemic life, with restrictions easing. We have already seen the unstable geopolitical situation impacting the energy sector, and those of us in the real estate industry are beginning to see impacts in the form of decreased consumer confidence. 

Although we’re seeing volatility in the stock market and fuel prices, so far, there is less volatility in housing prices, driven by one ongoing factor: low inventory.

Further, the inventory situation is unlikely to change given ongoing supply chain issues. Because the government pumped a lot of money into the economy to cushion the blow of Covid, and that money is still circulating, we don’t anticipate a dramatic impact on U.S. home prices from the Ukraine crisis.

Housing is still in an Economics 101 situation of low supply and high demand, and for the moment, that is the single biggest factor keeping housing prices relatively stable.