The current war in Ukraine is very concerning—for numerous reasons. Russia and Ukraine have been fighting since 2014. Back then, Russian President Vladimir Putin got the better of Ukraine and annexed the Crimean Peninsula in the name of “liberation”.
Putin now insists that he’s liberating Ukraine again, a nation he believes is truly a part of Russia and should have never been allowed to split off from the former Soviet Union after its dissolution in the early 1990s.
But this time, the Russian advance has been slowed significantly. Not only has the Ukrainian military and civilian population shown fierce resistance to Russian occupation, but the international community has come together to condemn Russia and impose severe penalties on its economy and elites.
While the war is taking place thousands of miles away, the ripple effects of economic sanctions and Russia’s isolation from the global market will be felt in the United States. That includes the real estate market.
How does a war in Eastern Europe affect the U.S. housing market?
So, how does a war in eastern Europe affect the U.S. housing market? Well, the first problem is oil. Russia is a huge exporter of oil and fuels for many European countries, with Germany being the largest importer of oil and fuels from Russia.
When the invasion began last week, the price of Brent crude, the international oil benchmark, rose sharply to $105 per barrel. That price increase was alleviated temporarily after the U.S. and other European nations announced they would release some of their own strategic reserves to dampen the impact of price gains at the pumps back home.
But that changed again when Germany announced that they would cancel Nord Stream 2’s construction, sending the markets back up. Some reports suggest that barrel prices could climb as high as $115 per barrel before we start to see improvements in the price.
As we know, high oil prices lead to higher gas prices at home. The Biden administration has…