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.
Key findings:
- 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.
The takeaway:
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.
Jordan Grice is RISMedia’s associate online editor. Email him with your real estate news ideas, jgrice@rismedia.com.
I think high gas prices will affect the market as it will affect everything in supply chain. The cost of a barrel of oil is affected by the war and the negative energy policies of this administration.
The inflation rate is a joke because it has been manipulated over the years by the government.
We have a food price index of 24%, interest rates on loans have increased by 25%, gas prices have doubled.
The Feds will push rates to control inflation which will eventually lead to a recession.
So is the war in Ukraine affecting the US economy, absolutely and it will catch up to the housing market as people lose confidence in our economy as they can’t afford to fill up their gas tanks.
Can you afford to pay $10 a gallon for gas? Governor Newsom in California is offering a tax credit for gas. It would be far better to temporarily reduce the state taxes on gas, everyone would benefit especially self-employed and low income workers.