Invasion of Ukraine Implications on Real Estate

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In Today's Email:

  • 🇺🇦 Invasion of Ukraine Implications on Real Estate
  • ❄️ Will Rising Interest Rates Cool Housing Market?
  • 👩🏻‍🚒 Ongoing Robust Job Creation


Invasion of Ukraine Implications on Real Estate

According to a report just recently released by Marcus & Millichap, here are there top three implications when it comes to the crisis in Ukraine with how it affects Real Estate in the United States.

1. Inflation Risks Intensify as Oil Prices Surge
     According to their estimations, this will have a net increase of 1-2% inflation
2. Interest Rates Face Complex Outlook
     The Feds balancing act just got a bit more complicated
3. Real Estate Stability Increasingly Valued By Investors
     Inflation Stability and Resistance Underpin Real Estate Advantage

If you have the time to read the full-length report (only four pages), I'd highly recommend you do.

Will Rising Interest Rates Cool Housing Market?

Owners display a preference to stay put. The number of existing homes for sale continued to abate in January, reaching just 850,000 houses, compared to an average of 1.7 million listed homes during the same month from 2015-2019.

There are several factors driving this trend, affecting both buyers and sellers. Very strong buyer demand for larger living options like single-family houses, to assist with at-home work and learning, has squeezed for-sale inventory and driven up prices. The rapid appreciation has made it difficult for owners to move up the quality stack and concurrently free up their entry-level homes.

Also, the typical generational swap, where older residents downsize or enter age-restricted communities, has been temporarily stalled, as virus concerns make the older cohort hesitant to live among others.

Ongoing Robust Job Creation

Employment growth continues at rapid clip. Employers created 678,000 jobs in February, exceeding the 2021 monthly average of 560,000 positions. The strong opening salvo in hiring for 2022 has lowered the unemployment rate to 3.8 percent.

Down from the pandemic peak of 14.7 percent in April 2020, the measure is just 30 basis points above the pre-health crisis benchmark, which in itself was also a historically tight rate.

There are nevertheless 1.4 percent fewer people working last month than in February 2020. Given the current trajectory of onboarding, that marker is set to be met and even surpassed this year.

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