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Impact of Ukraine invasion on housing

Impact of Ukraine invasion on housing
by Brad Cartier, posted in Newsletter

Our thoughts are with the people of Ukraine and those with family and friends impacted. by the invasion.

Nick Pipitone of Propmodo opens up this week’s newsletter discussing the Russian invasion of Ukraine and its impact on housing. “[T]he situation in Ukraine will more likely cause indirect impacts on commercial real estate via higher commodity prices, worsening inflation, and perhaps hampering economic growth. The most significant impact will be energy prices, particularly in Europe, where Russia accounts for 38 percent of all European Union natural gas imports.”

Georgia Kromrei of Housing Wire discussed the impact on interest rates, noting that “During large-scale disruptions, investors often flee to safer options, such as U.S. Treasury notes, bonds and mortgage-backed securities. All things being equal, that dynamic tends to put downward pressure on mortgage rates.”

According to Spencer Lee of National Mortgage News, following an increase in rates over the past weeks, mortgage rates have edged back down due to Russia’s invasion of Ukraine.

Taylor Marr of Redfin discussed the invasion, suggesting there will be a few impacts on real estate markets:

  • Interest rate rises may slow given the economic uncertainty.
  • Financial markets will be weakened and volatile, negatively impacting many who have their down payments savings in public markets.
  • Oil prices are rising, meaning commuter markets will be hit harder.
  • Russian investment in U.S. real estate markets will come to a standstill.

That said, Marr notes the following:

“With the impact of Russia’s attack on Ukraine in mind, our most recent housing-market outlook remains unchanged. The forecast is relatively conservative. It shows total home sales slowing to 6.6 million by the end of 2022, sale-price growth slowing to 5%, and continued yet smaller increases in mortgage rates throughout the year, eventually reaching about 4.3%.”

Tom Leahy of Real Capital Analytics comments on the impact to commercial real estate markets, noting that “The impact on commercial real estate will likely be indirect, as the effects of the conflict feed through into commodity prices, inflation, bond yields and ultimately perhaps economic growth.”

Kailash Babar of The Economic Times comments that a prolonged war in Ukraine pushing oil prices higher will put upward pressure on construction materials, which is already hurting from short supplies.


It was a busy week for one of the world’s largest real estate firms, CoStar. First, according to Clio Chang of Curbed, employee morale is so low at the company that in 2021 alone, 37% of employees left the company. In one example, Chang reports that a team at CoStar made unannounced video calls to employees ostensibly to check their internet speeds, but also to report on how promptly they answered and how professionally they were dressed. CoStar denies it was surveilling employees.

In trying to encourage employees to return to the office at an all-hands meeting, Chang reports that one slide noted “there would be 0.08 expected deaths in a year if all CoStar employees were between the ages of 30 and 49 and vaccinated.”

Daniel Geiger and Alex Nicoll of Business Insider comment on the story, noting that “Twenty-nine current and former employees said CoStar…surveilled workers, fired some for arbitrary or seemingly minor infractions, and attempted to censor or discredit criticism. They also said executives humiliated employees in front of colleagues to make examples of what was viewed as subpar work. “

That said, CoStar has been outperforming. According to a recent press release, revenue for 2021 was $1.94 billion, a jump of 17% year over year. Revenue for Q4 2021, was $507 million, another increase of 14% over Q4 of 2020.


New reports show that the multifamily market continues to grow and outperform. To begin, multifamily construction ended 2021 on a high note according to the National Association of Home Builders (NAHB). “In the fourth quarter, the Multifamily Production Index (MPI) increased one point to 54 from the previous quarter while Multifamily Occupancy Index (MOI) decreased six points to 69.”

According to NAHB, the strong performance indicates the rising demand for multifamily despite the ongoing labor and material shortages.

The Mortgage Bankers Association’s (MBA) latest Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originationsshows that multifamily loan originations were 79% higher in Q4 2021 than in 2020. These loans also jumped 44% from Q3 of 2021, and are expected to continue rising into 2022. In fact, multifamily loan originations have been steadily increasing since 2021:

Multifamily loan originations - MBA

Source: MBA (Feb 2022)

Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research, noted:

“The fourth quarter of 2021 was a record end to a record year of borrowing and lending backed by commercial and multifamily properties…Part of the growth from 2020 was a bounce-back from the worst of the recession. However, rebounding property fundamentals and strong valuations, record sales transaction volumes, and low interest rates all fueled commercial and multifamily borrowing and lending activity that easily outpaced previous periods.”

Similar to loan originations, multifamily starts are making a strong comeback according to Robert Dietz of NAHB. 

Multifamily starts - NAHB

Source: NAHB (Feb 2022)

“Condo multifamily production increased in 2021, totaling 26,000 units for the year. This marks a 44% gain from 2020, when the total was just 18,000.”

Raychel Lean of Globe St comments on this market, stating that 2021 was a blowout year for the apartment market, and that experts predict 2022 will be slower amidst looming affordability and ESG (economic, social, governance) challenges for the sector.

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