All Forum Posts by: Alessandra Verbena

@Alessandra Verbena watch the banks. International Banks shutting off Russias cash flow and investments. US regional banks that hold foreign assets being constrained. These will be a few of the indicators of financial challenges to investors. The markets : stock and real estate are bound with emotion. Hang tight and be wise with acquisitions (as we in the BP community always aim to be!) and ride this through. Best regards!

@Alessandra Verbena

It is hard to say, but from everything that I have read, economy based, Ukraine is a “breadbasket”, meaning they produce a number of different agricultural products that are used in everyday market items such as bread. They are a small country with a lot of output in this respect. So much so that people invested in this are see this as a hinderance stable price and increases are on the horizon. Secondly, they produce a number of bi-products similar to Russia that provide rare earth items. For example, Russia produces a very specific process that produces neon gas. Neon gas is used to produce chips used in cars, electronics, you name it. My guess is this is going to exacerbate supply line issues, trigger more inflation and cause the fed to increase rates and find ways to “tamp” down hot spots. Read about products produce at the raw material level in Ukraine. Ultimately, over time, it will affect tenants and their bills hence rent, rent rates, Property values…increase to all???. Gas and oil are an obvious issue associated with this conflict…inflation, temporary, months to ?? To what extent, who knows, hence for us we have built up funds to hopefully withstand these pressures over time and help others we rent to.

While it is still a very fluid situation, and all this will certainly change based on what happens next, here are the major affects of the Russian invasion of Ukraine on the US real estate sector so far:

1. The 30-yr. fixed-rate mortgage averaged 3.89% for the week ending Feb. 25, down three basis points from the previous week (a reversal from the trend over the past several months during which time rates have been steadily rising). 

2. The Fed is now indicating they may only increase interest rates by a quarter-point, not the predicted half-point in March, or may not increase rates at all. 

3. Mortgage rates slipping may reduce the urgency of buyers looking to buy before rates rise, perhaps slightly decreasing demand. 

4. Many investors moved into the bond market, which includes mortgage bonds, as they are generally considered safer, less volatile investments. Bond prices rose as a result. When bond prices go up, mortgage rates typically fall.

5. Disruption of Russian energy exports could increase gas prices, utility costs and cause further disruption to our supply chain driving up the cost of all types of goods. Such supply chain issues could greatly increase the cost of new home construction. 

6. The stock market, where many buyers pull money from to purchase property, tumbled earlier this week but then recovered at the end of trading on Friday. Crypto markets have been even more erratic. This market volatility may cause some buyers to sit on the sidelines until things stabilize.

7. The already accelerated rate of inflation is expected to rise even further—hurting renters, buyers, and builders who will continue to grapple with fast-rising construction costs. Home appreciation is expected to be in the double digits again this year. 

8. In the near term there may be fewer buyers with the confidence to offer way over asking price on properties this weekend (which has become the norm in most markets). Perhaps demand will lessen slightly, alleviating the extremely competitive market and providing some relief for those looking to get a property under contract/ needing to move. 

9. Sellers who were planning to list property later this year may want to consider listing now, in case there is a market shift later this year.