President Joe Biden has authorized sanctions this week on Russian Officials with assets in the USA. This is coming after Russia’s invasion of Ukraine shook the global markets causing a spiral in oil and gas which have experienced volatility, with crude oil rates going from $43.00 a barrel to about $104.00 and expected to peak to $109.00 – $143.00 depending on when the crisis ends. And the global stock market, which is expected to get hit by 5% – 30% depending on Russian stocks listed.
The luxury real estate market is also feeling the impact as the US government has put sanctions in place to restrict the Russian elite’s ability to access western financial institutions. Russians in Sunny Isles, Florida have been worried that the rising conflict will blacklist them from buying properties in the USA.
“If the Ukraine crisis deepens, then there may be a negative impact on the overall economy and the real estate sector, which is currently witnessing a growth trajectory,” experts say.
The Treasury Department has proceeded to immobilize Russian Central Bank assets that are being held in America in a bid to cripple their reliance on international markets with additional measures to exclude major Russian financial institutions including big lenders VTB and Sberbank, representing more than 80% of the banking sector from the Society for Worldwide Interbank Financial Telecommunication, or SWIFT.
“If SWIFT will be taken away from them, and hopefully that happens today, that would complicate any kind of transaction,” said Natalia Raphael, a Moscow-born real estate agent with the Keyes Company. “If they cannot use wires, if they cannot transfer money freely as they have been so far, that complicates business quite a bit.”
These Sanctions are very aggressive and are making it very difficult for Russian financial institutions and the elites to trade in US dollars because the invasion of Ukraine has caused some strain in the purchase of real estate properties in South Florida.
“We are extending the reach of US sanctions to prevent the elites close to Putin from using their kids to hide assets, evade costs, and squander the resources of the Russian people,” a National security council official told the Miami Herald. “This is the new approach.”
The National Association of Home Builders have also recorded a spike in prices of construction materials because of global supply-chain disruptions as prices of construction materials have gone up to 22% annually with lumber prices up 40% over the past months.
“Higher mortgage rates will slow home buying demand over the course of 2022, and the Russia-Ukraine crisis will add short-term volatility to the bond market,” said NAHB Chief Economist Robert Dietz.
The real estate market lately has been in a bubble which is about to burst and with the unsteady global situation with Russia invading Ukraine, prices are likely to increase drastically over the coming months, which could possibly lead to a recession.