Working with an experienced Manhattan realtor means that you should have access to a wide range of data and information that can help you make the best possible purchasing decision. And while we’re always ready to give you direct answers for speed and clarity, many of our clients prefer to read up on some of the national and global issues that are affecting the home market. Over the last few years, in particular, it has been critical for both buyers and sellers to stay up-to-date on the latest news and trends.
In 2022, the Russian and Ukrainian war is one of the most significant factors to potentially put the real estate market at risk. Discover seven ways that geopolitical tensions have affected New York City real estate.
Continued supply chain disruptions
Since the start of the pandemic in 2020, supply chain issues have rocked nearly every industry. Everything from toilet paper to baby formula has been unavailable to a large portion of the population at a given time. Although the pandemic has finally started to subside, various factors are still leading to supply chain challenges. Several have been attributed directly and indirectly to the Russian and Ukrainian war.
Although many of the products that have become scarce are not directly used in construction or remodeling, shortages of essential resources can ultimately slow or halt the production of critical items. In some cases, this is delaying the expected time of completion for homes in New York City. This can also lead to unanticipated delays in closing for buyers and sellers.
Shift in Russian buyer trends in the U.S.
Prior to the war in Ukraine, New York had the third highest number of Russian home buyers in the nation. 13% of Russians purchasing residential real estate in the United States were doing so in New York. This figure has been relatively stable up until now.
Although updated figures for 2022 have not yet been released, this number is almost certain to change. The New York Times reported in March that even before the war, thousands of Russians had started to relocate to the States. In fact, it is estimated that “4,100 Russians crossed the border without authorization” in 2021. During the first four fiscal months of this year, the number had already reached 6,420.
According to this same report, the vast majority of Russians moving to the U.S. now seems to be originating at the southern border in California. In the coming months, many of these individuals who’ve escaped the harsh conditions in their home country may begin looking for homes in New York City. However, only time will tell how the buying data among Russian residents will change.
Economic turbulence
Any time there is a war happening somewhere in the world, the economic damage is sustained globally. Although the impacts on the U.S. are expected to be short-term (primarily due to limited trade between the U.S. and Russia/Ukraine), ripples are still being felt from the ongoing effects of the war.
One way that the impacts are being felt is through continued inflation increases. While there are multiple variables at play, rising inflation rates have been a major national challenge, especially for larger cities. Prices on everything have reached new highs, making it challenging for individuals who are renting to save enough funds to make down payments on a home. Whenever the cost of goods increases, the real estate market — both locally and nationwide — feels the pain.
Luxury real estate is likely to be most impacted
The purchase of luxury real estate will always be in demand in New York City. Many of the globe’s most affluent people own condos here thanks to the city’s prime location, world-class amenities, and stunning views. However, due to the uncertainties of the economy, purchases of luxury and vacation properties have slowed down slightly.
Why? Some experts speculate that because these home purchases are easier to delay, buyers are waiting to make offers. If the war continues for a prolonged period of time, some real estate professionals anticipate that the entire market will begin to take a dip due to the massive financial commitment involved for all budget levels. Again, since the future is uncertain, only time can reveal the long-term effects.
The overall impact is projected to be minimal
Financial and real estate experts anticipate the overall impact of the current geopolitical tensions with Russia to be minimal. Trade is extremely limited between the United States and both Russia and Ukraine, so there have been no massive disruptions economically speaking.
Still, uncertainties always remain
As the entire world learned since the start of 2020, anything can happen at any time. Whether concerned about geopolitical tensions, viruses, or conflicts at home, it is wise to stay up-to-date on national and global affairs. In addition to the concern for human life, unexpected events have the real potential to affect your investments, retirement planning, and future real estate transactions. Knowing what is going on around you can help you reduce losses and stay ahead of factors that can negatively impact your investments.
Work with an experienced realtor to navigate challenging times
Want to mitigate the risks of buying and selling real estate in New York City? Work with real estate agent Kobi Lahav and his outstanding team of professionals. From day one, he will navigate you through all of the ins and outs of the local real estate market to achieve your goals. Having someone in your corner at all times is an absolute must in this day and age. Working with Kobi means that you’ll have answers to your most pressing questions. You’ll never be treated like a number, and will always have a skilled realtor advocating for your needs.
Contact him today at 917-858-1915 to get started. Additionally, you can visit the Kobi Lahav real estate website to browse featured properties, obtain property valuations, and learn more about the team.
