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Will the Russia/Ukraine Conflict Impact U.S. Housing Market?

Russia has been in the headlines a lot lately and for good reason—whether you call it a “conflict” or “military offensive” an “invasion” or “war,” Russia’s recent actions are having global consequences. Seemingly every hour, news comes out about another government or company that is closing up operations in Russia as a show of solidarity with Ukraine. 

Knowing this, the National Association of Realtors (NAR) rehashed it’s 2021 International Transactions in U.S. Residential Real Estate Report (originally released in July 2021) to find out the impact of Russian buyers and investors on the U.S. real estate market as a whole. 

Even if sanctions against Russian buyers come to fruition, little impact will be seen in future market numbers. 

“Any decline in international real estate transactions will have little direct impact on the U.S. housing market,” the NAR said. “Russian foreign buyers account for less than 1% of foreign buyer purchases, and overall, foreign buyers account for about 2% of existing home sales.” 

Citing their report, purchases of homes by foreigners is down to its lowest volume since 2011. International buyers purchased 107,000 residential properties totaling $54.4 billion from April 2020-March 2021; this represents just 2.8% of the $1.96 trillion of volume seen during the same period. 

To put it another way, Russian buyers do not even place as one of top buyers of U.S. properties. The top five foreign buyers are: Canada (8% of foreign volume); Mexico (7%); China (6%); India (4%); and the United Kingdom (4%). 

But when Russian buyers did purchase a property in the U.S., they overwhelmingly bought in five states: Florida (29% of Russian volume); Georgia (16%); New York (13%); California (8%); and Illinois (5%). 

The NAR points out that even in Florida, where Russians purchased the most property, it still only made up 0.2% of Florida’s total market during the survey period. 

So, who exactly is the average Russian buyer? The survey found that 41% of Russian foreign buyers lived abroad while the remaining 59% of Russian buyers lived in the U.S. with a visa (typically representing those with diplomatic status, workers, or students). 54% purchased their property to use as their primary residence, while 36% purchased their property to use as a vacation home or an investment. 

Single-family homes made up 55% of Russian purchases (compared to a rate of 65% of all foreign buyers) but Russians bought condos at a rate higher than average—26% of Russian purchases were condos compared to 17% of all foreign buyers. 

Data also suggests that Russian buyers are typically wealthier than the average buyer. Numbers show that the median purchase price among Russian buyers was $325,000, higher than the median of all foreign buyers which stands at $303,200. But when looking at the average purchase price, Russians spent $652,915 on their properties compared to an overall average of $480,695 per property for foreign buyers. About half (51%) of Russians paid cash for their property, slightly above the 44% rate of all foreign buyers. 

About Author: Kyle G. Horst

Kyle G. Horst is a reporter for DS News and MReport. A graduate of the University of Texas at Tyler, he has worked for a number of daily, weekly, and monthly publications in South Dakota and Texas. With more than 10 years of experience in community journalism, he has won a number of state, national, and international awards for his writing and photography including best newspaper design by the Associated Press Managing Editors Group and the international iPhone photographer of the year by the iPhone Photography Awards. He most recently worked as editor of Community Impact Newspaper covering a number of Dallas-Ft. Worth communities on a hyperlocal level. Contact Kyle G. at [email protected].

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