Will the Russia Ukraine War cause house prices to fall?

If you’re like most people, wondering how the Russia-Ukraine War is going to impact housing market in San Diego and United States, read on and lets find out. I’d like to say right out of the gate, I am praying regularly for Ukraine, and I hope that this war ends swiftly. In the meantime, let’s talk about, analytically, how is this impacting the San Diego housing market.

What I’m seeing in the data and talking with other real estate professionals, is what’s happening right now is it is certainly not having a negative impact on the housing prices here in San Diego. If anything, it’s having the opposite effect. There are a couple of reasons for this. First, there is always a flight to safety for money coming from stocks, and moving into real estate, when something like this is happening. 

So there is a lot of foreign investment occurring right now, which is helping to drive prices. Also mortgage rates are, dipped down and people are kind of piling in right now to real estate to get as best of a price on their mortgage rates as they possibly can, before they start going up. Mortgage rates are going to rise. We have rapid inflation happening and mortgage rates are going to start rising, which is going to start dampening down the real estate market.

Bidding wars are definitely still happening right now, having massive price overruns. San Diego just saw appreciation go up 7.3% in the last two months, and it’s still rising. The San Diego housing market is the highest sales to list price that we have ever seen since data began being tracked, which is over 105% on average of what home is listed for. ot homes are selling for 20 to 25% over list price right now, regularly. 

What’s happening is people are trying to get in before interest rates rise even more, so it is causing even more intense bidding wars. So as the War in Ukraine drags on, it may have more of an impact one way or the other due to inflation. Now, inflation was here before Ukraine and it’s going to continue because of this. Then mortgage rates will rise to counteract inflation and we’ll see what happens in the long term with those rising rates and how that impacts the US housing housing market.

However, that being said, the housing market supply, the inventory amount of homes that we have available in San Diego right now is sitting right around 1,800 homes. A balanced market in San Diego is about 8,000 homes. So that’s when supply and demand are in equilibrium and it’s not a buyers market or a seller’s market. We are strongly in a sellers market right now. There are a lot of  folks that have refinanced at extremely low interest rates, and as mortgage rates rise, they’re going to be less inclined to sell because they have such a low interest rate right now.

That could drive inventory down even further and create more supply and demand issues that has been driving this highly appreciating market as well. 

Tat’s what’s happening on the ground here in the San Diego real estate market and that’s how the Russia Ukraine War is impacting us right now. We’ll see how things go in the long term, but looking forward in the next couple of months, this seems to be what is happening.

If you are looking at buying or selling, I would love to help you. I’d love to talk with you in more detail about any of these topics that I discussed here regularly on my channel.

Please reach out to me via phone, text, or email, and let’s have a conversation and we’ll see on the next video.

Curtis Chism, Realtor
858-281-2568 | Mobile
mailto:info@sandiegohomes.io
Chism Team | DRE #02105113
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