How the Russia-Ukraine conflict could affect the U.S. Housing Market
February 25, 2022 | Anthony Cosenza
Uncertainty surrounding Russia and Ukraine may have ripple effect on United States’ mortgage rates
It seems as if the promise of the world normalizing in 2022 was short-lived. Tension in Eastern Europe is bringing about a lot of questions–one of them being how the Russia-Ukraine conflict could affect the U.S. housing market.
According to HousingWire, differing short-term and long-term affects on the United States’ housing markets will be felt. In terms of the former, mortgage rates–which have been slowly rising of late–may dip again because of the next potential global crisis on the horizon. However, with the U.S. financial powers-that-be already working to combat high inflation, that dip may be short-lived.
“While mortgage rates trended upward in 2022, one unintended side effect of global uncertainty is that it often results in downward pressure on mortgage rates,” said Odeta Kushi, deputy chief economist of one of the most trusted title insurance firms, First American to HousingWire. “The 10-year Treasury yield is down today, likely in response to the worsening Russia-Ukraine conflict, and mortgage rates may follow suit.”
In our last Real Estate Market Update video, we had some data on current mortgage rates. In those, you witnessed the continued slow climb of interest rates on various loan options.
However, this conflict may change that in the short-term. Still, the diametric opposite forces of inflation and global uncertainty may bring about a tug-of-war, as it goes with the U.S. Housing Market.
“With this morning’s news on Russia, I don’t really think that that’s going to slow [The Fed] down for now,” said Joel Kan, who is an economist at the Mortgage Bankers Association. “They acknowledge that that’s a risk. But given the inflation picture, we’re going to see at least a couple of rate hikes.”
In essence, the experts are saying that this conflict will bring about a number of ebbs and flows to the housing market. However, when it comes to economic stability, most forecasters believe the real estate market will be far less volatile than the stock market and other arenas. Regardless, the impacts of how the Russia-Ukraine conflict could affect the U.S. housing market will bring a number of twists and turns for us all to monitor.