The Russian invasion of Ukraine has been heavy on our minds and hearts. An event like this impacts the entire world in one way or another. 

While we don’t claim to be experts in foreign policy, we are experts in real estate. The war in Ukraine will most likely affect the Colorado real estate market, let’s talk about why and how:

Interest Rates
Mortgage rates went up to 4.14% last week. By the time you read this, they may be even higher. The federal reserve is expected to raise interest rates a quarter of a point as a response to the high inflation we are experiencing. This increase, along with the global uncertainty we are facing, could have implications on the stock market, which could also spill into the housing
market.

If you’re considering a home purchase or refinance, just know that interest rates are still low even with this increase. Taking advantage of these still near historic low rates could save you hundreds of dollars each month, which we could all use! This is especially important to those who have been considering a refinance.

Uncertainty and Inflation 
As you’ve likely noticed, the price of everything has increased significantly. Inflation has hit a 40 year high, and it sounds like it may only get worse. When you combine the frustration over inflation and overall uncertainty caused by Russia, it may make people put off buying a home which will reduce demand. 

Inflation will also push the prices of new homes even higher since construction costs. The higher costs of building a house plus the higher interest rates could price many Colorado home buyers out of the market. Now, we certainly aren’t saying that a “crash” is coming to the real estate market, but if home buyers decide to wait it out, prices may dip a bit. However, if demand doesn’t decrease, we think home values will continue to rise in most Colorado areas.

Markets That May Be Positively Impacted
Gas prices have skyrocketed, and the US has banned Russian oil imports. According to a report by the National Association of Realtors, this could lead to growth for the states that produce oil. Colorado is the country’s fifth-largest crude oil producer. After a state law passed in 2019 that
tightened regulations on oil production, drilling has slowed down significantly. However, as Dan Haley, CEO of the Colorado Oil and Gas Association mentioned, permits are up, and people are
waiting to get to work. 

In fact, there are currently 30 permits waiting to be approved to begin oil production in Colorado. If these permits are approved, they will bring new jobs to Colorado, which would increase demand for housing and cause prices to rise.

Bottom Line
There’s no doubt that the current events are unnerving. While we don’t know exactly what the future holds, it is best to focus on what you can control. If you want to move forward with purchasing a home, make sure to stick to a budget you are comfortable with. As always, if you have any questions, give us a call.