Impact of War with Ukraine on U.S. Real Estate
Investor · CA · Member since 2016 · 23 posts · 11 votes
Impact of War with Ukraine on U.S. Real Estate
Most Popular Reply
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
4yQuote from @Account Closed:
Quote from @Alessandra Verbena:
Perhaps we will find out in the next couple of days one way or another if this will escalate further, what if Russia does invade Ukraine and the U.S. gets involved? Without going too deep, I am seeing speculation on a range of impacts here in the U.S., from impacts to the technology sector, to food and gas prices rising as a consequence. Let's say the worst case scenario happens and Russia invades and the U.S. steps in, what immediate impact will this have to the U.S. economy and subsequently real estate? Anyone seriously considering or holding off on any acquisitions as a result?
No, Russia won't invade Ukraine. There are several reasons why, but if you listen to Ukraine instead of Biden, you will understand. Biden wants the diversion because he is doing so poorly. It just ain't gonna happen.
Even if they had a brief skirmish, it wouldn't impact real estate in the USA.
What you need to watch are the Fed's interest rate increases and U-6 Unemployment Rate. Real Estate is local, not international.
This prediction aged badly. Eleven days later and Russia has invaded Ukraine, asking them to lay down arms and surrender. Hard to say where this goes, but the immediate impact on the energy sector will have global ramifications. Everything we consume has energy costs built into it. Saudi Arabia has made strategic agreements with Russia and refuses to increase oil output. China is giving a nod to Russia, probably because they see opportunity to move into Taiwan. I agree real estate is local, but our economy is global.
84 Replies
- Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes4y
Quote from @Alessandra Verbena:
Perhaps we will find out in the next couple of days one way or another if this will escalate further, what if Russia does invade Ukraine and the U.S. gets involved? Without going too deep, I am seeing speculation on a range of impacts here in the U.S., from impacts to the technology sector, to food and gas prices rising as a consequence. Let's say the worst case scenario happens and Russia invades and the U.S. steps in, what immediate impact will this have to the U.S. economy and subsequently real estate? Anyone seriously considering or holding off on any acquisitions as a result?
No, Russia won't invade Ukraine. There are several reasons why, but if you listen to Ukraine instead of Biden, you will understand. Biden wants the diversion because he is doing so poorly. It just ain't gonna happen.
Even if they had a brief skirmish, it wouldn't impact real estate in the USA.
What you need to watch are the Fed's interest rate increases and U-6 Unemployment Rate. Real Estate is local, not international.
- Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes4y
I think at this point it is safe to say if there was a war prices would go up. LOL
- 4yScott JohnsonBusiness MemberSpecialist · Greenville, NC · Member since 2019 · 673 posts · 408 votes
Quote from @Account Closed:
Quote from @Alessandra Verbena:
Perhaps we will find out in the next couple of days one way or another if this will escalate further, what if Russia does invade Ukraine and the U.S. gets involved? Without going too deep, I am seeing speculation on a range of impacts here in the U.S., from impacts to the technology sector, to food and gas prices rising as a consequence. Let's say the worst case scenario happens and Russia invades and the U.S. steps in, what immediate impact will this have to the U.S. economy and subsequently real estate? Anyone seriously considering or holding off on any acquisitions as a result?
No, Russia won't invade Ukraine. There are several reasons why, but if you listen to Ukraine instead of Biden, you will understand. Biden wants the diversion because he is doing so poorly. It just ain't gonna happen.
Even if they had a brief skirmish, it wouldn't impact real estate in the USA.
What you need to watch are the Fed's interest rate increases and U-6 Unemployment Rate. Real Estate is local, not international.
"When all else fails, they take you to war." - Gerald Celente
War is the great unifier that bands people together out of fear and the need to survive. It gets people to focus on one thing...
My recommendation, Alessandra : Turn off the Cartoon News Network (CNN) and any other mainstream media for one week and read one of Brandon or David's books. Focus on what you can control.
Side note - I walked by a TV with the Cartoon News Network on, and the report said something to the effect of: "Russia, is actually denying that they're intending to invade Ukraine and are saying the west is making up lies." It's certainly a sad day when I am more inclined to believe the Kremlin than a domestic reporter...
- 4yEric JansonBusiness MemberReal Estate Agent · Minneapolis, MN · Member since 2015 · 102 posts · 100 votes
If this leads to World War 3, then it would probably have an effect on the entire economy, but I don't think that will happen. If it is a small skirmish or nothing at all, this will have zero impact on us here. There is always a "sky is falling" story out there about real estate. Sometimes they come true, but 99% of the time they don't. I agree with the other statements. Turn off the news and focus on what you can control. The glass can be half full or half empty. It is up to you how you see it.
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes4y
Quote from @Account Closed:
Quote from @Alessandra Verbena:
Perhaps we will find out in the next couple of days one way or another if this will escalate further, what if Russia does invade Ukraine and the U.S. gets involved? Without going too deep, I am seeing speculation on a range of impacts here in the U.S., from impacts to the technology sector, to food and gas prices rising as a consequence. Let's say the worst case scenario happens and Russia invades and the U.S. steps in, what immediate impact will this have to the U.S. economy and subsequently real estate? Anyone seriously considering or holding off on any acquisitions as a result?
No, Russia won't invade Ukraine. There are several reasons why, but if you listen to Ukraine instead of Biden, you will understand. Biden wants the diversion because he is doing so poorly. It just ain't gonna happen.
Even if they had a brief skirmish, it wouldn't impact real estate in the USA.
What you need to watch are the Fed's interest rate increases and U-6 Unemployment Rate. Real Estate is local, not international.
This prediction aged badly. Eleven days later and Russia has invaded Ukraine, asking them to lay down arms and surrender. Hard to say where this goes, but the immediate impact on the energy sector will have global ramifications. Everything we consume has energy costs built into it. Saudi Arabia has made strategic agreements with Russia and refuses to increase oil output. China is giving a nod to Russia, probably because they see opportunity to move into Taiwan. I agree real estate is local, but our economy is global.
- Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes4y
Quote from @Joe Splitrock:
Quote from @Account Closed:
Quote from @Alessandra Verbena:
Perhaps we will find out in the next couple of days one way or another if this will escalate further, what if Russia does invade Ukraine and the U.S. gets involved? Without going too deep, I am seeing speculation on a range of impacts here in the U.S., from impacts to the technology sector, to food and gas prices rising as a consequence. Let's say the worst case scenario happens and Russia invades and the U.S. steps in, what immediate impact will this have to the U.S. economy and subsequently real estate? Anyone seriously considering or holding off on any acquisitions as a result?
No, Russia won't invade Ukraine. There are several reasons why, but if you listen to Ukraine instead of Biden, you will understand. Biden wants the diversion because he is doing so poorly. It just ain't gonna happen.
Even if they had a brief skirmish, it wouldn't impact real estate in the USA.
What you need to watch are the Fed's interest rate increases and U-6 Unemployment Rate. Real Estate is local, not international.
This prediction aged badly. Eleven days later and Russia has invaded Ukraine, asking them to lay down arms and surrender. Hard to say where this goes, but the immediate impact on the energy sector will have global ramifications. Everything we consume has energy costs built into it. Saudi Arabia has made strategic agreements with Russia and refuses to increase oil output. China is giving a nod to Russia, probably because they see opportunity to move into Taiwan. I agree real estate is local, but our economy is global.
I'll try to keep my contempt for Biden under wraps but like Afghanistan America failing back our commitments ( that never should have been made in the first place) and Russia calling Americas bluff is another threat to the value of the America dollar. And the American standard of living is all about the world using our dollar as the reserve currency. Great for inflation hedges like real estate but once the politicians can't send stimy checks to the American sheeple to go buy cheap Chinese goods at Wal-Mart thats when the rubber will meet the road. Americas weakness is provoking China to take Taiwan which could have real economic consequences.
I doubt there will be a war over this.
I doubt the USA would challenge Russia.
If you hear Air Raid sirens going off from the cold war, I think all of the fallout shelters have been re-purposed.
You will have to just "Duck and Cover": https://www.youtube.com/watch?v=LWH4tWkZpPU
If your areas still has Sirens in it (most don't).
- Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes4y
Quote from @Scott Mac:
I doubt there will be a war over this.
I doubt the USA would challenge Russia.
If you hear Air Raid sirens going off from the cold war, I think all of the fallout shelters have been re-purposed.
You will have to just "Duck and Cover": https://www.youtube.com/watch?v=LWH4tWkZpPU
If your areas still has Sirens in it (most don
The US did challenge Russia and made it clear to Ukraine that we had their back. Putin just exposed our bluff. Ukraine is screwed. Let’s hope our troops don’t have to die along any Ukrainian patriots. But hey as CNBC would say “let’s buy the dips.”
- 4yAlicia MarksPro MemberFort Worth, TX · Member since 2020 · 1k+ posts · 2k+ votes
I'm appreciating the thoughtful discussion on the implications of global conflict! Just a reminder for those who post after this to keep it friendly, nonpolitical, and on topic as related to real estate. Our moderator team will appreciate it.
- Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes4y
Quote from @Alicia Marks:
I'm appreciating the thoughtful discussion on the implications of global conflict! Just a reminder for those who post after this to keep it friendly, nonpolitical, and on topic as related to real estate. Our moderator team will appreciate it.
I’ll try and stay away from this thread. But I don’t like the BP line that politics is not part of real estate investing, or BP is above the fray. There are valuable and interesting debates and ideas that you guys shutdown to the detonate of your members in my opinion.
- 4yAlicia MarksPro MemberFort Worth, TX · Member since 2020 · 1k+ posts · 2k+ votes
Quote from @Eric Bilderback:
Quote from @Alicia Marks:
I'm appreciating the thoughtful discussion on the implications of global conflict! Just a reminder for those who post after this to keep it friendly, nonpolitical, and on topic as related to real estate. Our moderator team will appreciate it.
I’ll try and stay away from this thread. But I don’t like the BP line that politics is not part of real estate investing, or BP is above the fray. There are valuable and interesting debates and ideas that you guys shutdown to the detonate of your members in my opinion.
That is a great point Eric. I manage the moderator team and am currently working on retraining the team and assessing what should and should not be allowed in the forum discussions. The current policies walk a careful line, but are being evaluated to see if adjustments will be made.
- Realtor · St. Petersburg FL · Member since 2020 · 37 posts · 71 votes4y
@Mike Hern well that didn't age well.
- Realtor · St. Petersburg FL · Member since 2020 · 37 posts · 71 votes4y
@Scott Johnson looks like that reporter might have been right.
- Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes4y
Quote from @Aaron Oetting:
@Mike Hern well that didn't age well.
Why? Have real estate prices crashed where you are? Not likely. If you own property in Kiev, yeah that's a problem, but my properties are in the good ol' USA and they are doing fine thank you very much. Although I can't get into RT.com anymore. It's one of the better sources of information for Russian news. (Russian Times) Yep. I've been to Moscow and have friends there. But historically Kiev has belonged to Russia since 988 AD. That's a long time. That is where the Russian Orthodox church got it's start.
- Realtor · St. Petersburg FL · Member since 2020 · 37 posts · 71 votes4y
@Mike Hern my man it's okay to be wrong. Being able to admit when you are wrong is important to being a good investor and a good human. You literally said "Russia won't invade Ukraine." the exact first words of your post. That has proven to be wrong.
I don't think we need to get into your supporting the over throw of an independent government. For 900 years the land you own in the US was owned by Native Americans I am pretty sure you would not be happy if they took it back by force.
But that's not really the point. Keeping it Real estate investing focused. You made a prediction and it turned out to be wrong. Russia did invade (no one said this would collapse RE prices). Being able to acknowledge when our predictions are wrong is vital to being a good investor.
- 4yMatthew Irish-JonesBusiness MemberReal Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
@Aaron Oetting a wise man once told me: we all need to be realistic about our ability to predict the future.
Luckily we now have BP forums to be able to keep score.
Irish Jones Realty4.948 Reviews - Realtor · St. Petersburg FL · Member since 2020 · 37 posts · 71 votes4y
@Matthew Irish-Jones that's why I don't make predictions with my business hat on. I just map out if that happens then I will do this, if this other thing happens I will do this other thing. I think you can be prepared without making predictions. Making predictions usually makes us look bad, humans are terrible at predicting the future with reliable accuracy.
My two cents:
Immediate impact: already seeing an increase in energy and commodity prices (inputs to real estate). This will fuel inflation and our government reaction to these increase in input costs could make inflation even worse. This will put the Fed in even more of a pickle with regards to increasing rates which could impact RE prices.
Long term impact: the invasion of Ukraine could trigger other geo-political events that could have massive implications for all investors regardless of asset class. Russia has already threatened Finland and Sweden and China is already making bold statements with regards to the Russian invasion of Ukraine. If Russia threatens the sovereignty of other European nations and/or China intensifies rhetoric/action against Taiwan, things could get very volatile in the markets globally, which could have a negative "wealth effect" which may impact RE investing. Also watch the U.S. dollar. Given the massive amounts of stimulus, our record debt, and how much the Chinese own in U.S. treasuries, the dollar could be under long term pressure which could have major implications for investors.
- 4yMatthew Irish-JonesBusiness MemberReal Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
@Aaron Oetting. I keep my predictions to myself. However, keeping track internally I have found that I am always right half of the time LOL.
Tell me what’s going to happen in the world 6 months from now and I will tell you what’s going to happen in the market.
In my past life I did commodity purchasing for an energy company. You can go out of business over night predicting the future. A hedge is not a bet, it’s locking in a cost with a contractual obligation from a buyer at a price. As soon as you try to lock in a sales price and play the market on cost you are available playing with fire.
Irish Jones Realty4.948 Reviews - Rental Property Investor · Murrieta, CA · Member since 2020 · 338 posts · 344 votes4y
@Alessandra Verbena @Matthew Irish-Jones
Matt,
I agree with you that trying to predict the future can be a very expensive game. I think it is better to focus and place your bets on things that have limited downside risk. All investing is RE, stock market, etc. is making decisions that grow your capital, but do not risk or minimize your downside risk to losing that capital. For example, if you buy a property and bet 100% on appreciation and have a negative cash flow position that has a lot of downside potential. Even though I understand the argument that in 10-20-30years that real estate will be more expensive. In the short term that is extremely risky. I read a post about 6 months or so ago on BP where someone bought a SF property and was losing over $2,000/mo. but justified it by saying he was getting like $3,000/mo. in appreciation. This is obviously an extreme example but all you are doing is justifying to yourself that it is ok to lose money, but this has big time downside risk. Whereas if you bought a property that was cash flow positive you mitigated your downside risk because no matter what that property is worth if you are making positive cash flow you will never be forced into a position that you have to sell and since real estate will be more expensive long term there is very little downside risk. - Rental Property Investor · Murrieta, CA · Member since 2020 · 338 posts · 344 votes4yAs far as people saying this will destroy the economy it has been in bad shape for a while. If you watch our debt/GDP were at 125%. Which is higher than it has been since the 40s. The big difference between the 40s and now is what kind of debt that is. In the 40s that was during WW2 so the increase in debt was a one-time fixed cost i.e., CapEx. Right now, most of our debt is expenses that we pay every year, social security, welfare, social programs etc., so that debt will not just disappear over time. In fact, most of it is tied to the CPI which means it's an ever-increasing expense. The only way to get out of this is to cut costs, I do not see the government cutting any social programs, this would be political suicide. You can use inflation to raise nominal GDP, but nominal GDP has to go up at a faster rate than you are increasing the debt. The third option is you need to produce more goods and services. The total debt would not be a big deal if you were producing enough goods and services to have a healthy Debt/GDP. An example using real estate if your total expenses and debt service was $2000/mo. but your property made $5,000/mo. no big deal, but if your income was only $1,600/mo you have some issues.
Quote from @Eric Janson:
If this leads to World War 3, then it would probably have an effect on the entire economy, but I don't think that will happen. If it is a small skirmish or nothing at all, this will have zero impact on us here. There is always a "sky is falling" story out there about real estate. Sometimes they come true, but 99% of the time they don't. I agree with the other statements. Turn off the news and focus on what you can control. The glass can be half full or half empty. It is up to you how you see it.
Besides the debt the Eurodollar futures curve inverted in early December and became a lot more inverted last week. The Eurodollar system is the US dollar outside of the US, which is about 79% of all total dollars. The Eurodollar is predicting recession in the world economy or less economic activity in the future. The US bond market has been getting flatter, which is the sign of a weak economy, and is getting closer to an inversion which has preceded every recession since WW2 and real estate has gone down in about two thirds of all recessions. The Dec TIPS data came down and basically predicted the same thing that we are not in a good situation.
This again goes back to my other post that your main goal is to minimize downside risk. I bought last year, and I am a buyer in all markets, as long as I do not expose myself to risk. Like you said no one knows when the next recession will be, and no one knows how a recession will play out. They have done a pretty good job at kicking the can down the road but who knows how long they can do it for. Since the GFC every time the economy, specifically the stock market, was going down they did deficit spending and QE to prop it back up. It was no big deal since they were doing it in a time of low CPI. Now the CPI has gone to 7.5% and the FED is left with a big decision.
Rule #1 Do not lose money
Rule #2 Do not forget rule #1
- Realtor · St. Petersburg FL · Member since 2020 · 37 posts · 71 votes4y
@Nick Robinson my problem with this analysis is a government is not a for profit business so measuring it's success on a income to debit basis is like measuring fish on how well they climb trees.
- Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes4yPerhaps you should go back and actually read the title of the post
Quote from @Aaron Oetting:
@Mike Hern my man it's okay to be wrong. Being able to admit when you are wrong is important to being a good investor and a good human. You literally said "Russia won't invade Ukraine." the exact first words of your post. That has proven to be wrong.
I don't think we need to get into your supporting the over throw of an independent government. For 900 years the land you own in the US was owned by Native Americans I am pretty sure you would not be happy if they took it back by force.
But that's not really the point. Keeping it Real estate investing focused. You made a prediction and it turned out to be wrong. Russia did invade (no one said this would collapse RE prices). Being able to acknowledge when our predictions are wrong is vital to being a good investor.
"Impact of War with Ukraine on U.S. Real Estate"
So, tell me, what is the Impact?? - Realtor · St. Petersburg FL · Member since 2020 · 37 posts · 71 votes4y
@Mike Hern I don't know my man, I am not in the business of geo politics and don't base business on those kind predictions. Who would have predicted during a pandemic we would have a crazy house spike. I am in Real estates not the predictions buisness so I am preparing for different eventualities and will act accordingly to which one shakes out. Just saying you literally predicted they would not invade. And they did a week later. It was a wrong prediction be willing to step up and say I got that wrong. I think that a huge buisness lesson to be able to identify when you are wrong and admit it.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.