War in Ukraine a not expected to Hamper Housing Market
As cease-fire negotiations stall and Russian attacks on Ukraine rage on, the uncertainty of how the fallout of the geopolitical situation will impact economic markets globally continues to capture headlines.
However, experts at the National Association of REALTORS® (NAR) aren’t convinced that the war will deal a significant blow to the U.S. real estate market, according to data from the organization’s survey of foreign buyer transactions within its membership, which tallied about 5,000 respondents.
- Russia accounted for less than 0.8% of all foreign buyers who purchased U.S. residential property from April 2015 through March 2021.
- The top five destinations for Russian foreign buyers purchasing property were Florida (29%), Georgia (16%), New York (13%), California (8%), and Illinois (5%).
- The median purchase price among Russian buyers was $325,000.
- The average purchase price among Russian buyers was $652,915, compared to $480,695 among all foreign buyers.
- Because most Russian foreign buyers reside in the U.S., 54% purchased the property for use as a primary residence, and only 36% purchased the property for vacation use or to rent out.
- More than half (51%) of the Russian foreign buyer purchases were all-cash, which is more likely for foreign buyers who lived abroad.
- The report noted that less than half (41%) of Russian foreign buyers that bought homes lived abroad while most already lived in the U.S. as visa holders for work, as diplomats and students when they purchased the property. This is on par with the amount of U.S. foreign buyers overseas, according to the report.
While the implications of a persisting invasion of Ukraine by Russia has worried economists monitoring the global economy, the effects aren’t likely to harm the housing market too much, according to Gay Cororaton, senior economist and director of Housing and Commercial Research at NAR who authored the association’s March 7 report.
“The Russia-Ukraine tension is likely to have little direct impact on the U.S. housing market. Russian foreign buyers account for less than 1% of foreign buyer purchases, and foreign buyers account for just 2% of existing-home sales,” Cororaton said in an emailed sent to RISMedia.
She went on to say that the decline in foreign demand “will ease supply constraints for domestic buyers.”
Considering the impact to the global oil markets in the wake of the war in Ukraine, NAR also anticipates that the oil-producing states in the U.S.—Texas, North Dakota, New Mexico, Oklahoma, Colorado, Alaska and Wyoming—could experience a tailwind financially as they increase oil production to improve global supply.