War and the Housing Market: Why Everything Just Changed

How will the war in Iran affect the housing market?

Current events, especially wars, always affect the housing market.  But not always in the same manner, with oil and trade disruptions,  a sense of uncertainty is pervasive, especially in terms of the economy.  That said,  mortgage interest rates  have already risen   from  5.99%  to 6.3% for  the 30-year fixed rate just in one week!  Prior to the war, the South Florida housing market was seeing an uptick with residential home pricing slowing, inventory strong, and mortgage rates less than 6% .

What does this all mean for residential real estate under these new uncertain circumstances?

According to a recent article in Newsweek,  some economists predict that  while the war creates volatility, it is the employment data results that will affect the housing market.  If less people are working, causing weaker employment data, then mortgage interest rates may, in turn, go lower.  However,  if less people are working, there may not be a strong homebuying market.

It really depends upon how long this war lasts.  If the conflict is limited, higher energy prices, bond yields, and mortgage interest rates may be temporary.    Following the initial strike in Iran, Redfin projected 3% more home sales than last year and 1% price growth during 2026 according to its chief economist.  However, if the war is longer than expected, potential energy disruptions will increase, causing higher inflation and energy prices which may inevitably lead to higher mortgage interest rates.

Yet, as senior economist Sam Williamson at First American notes, that while geopolitical shocks tend to impact mortgage interest rates and consumer sentiment, they have less impact on the underlying housing demand.  While housing affordability remains an issue, many believe that housing inventory itself has improved from last year.

Finally, if the war is protracted, South Florida will likely benefit from more domestic and international tourism as  well.   There will be more seasonal and short term rentals that will positively impact the pricing of that segment of the residential market.

What does this all mean?

How the real estate market responds to the war is dependent on many variables.  The real question is the willingness of qualified homebuyers to make a critical financial decision in purchasing during this time.  For those residential home buyers who pay all cash, they may be able to better negotiate for a property if other would-be buyers are unsure about purchasing.  For those residential home buyers who qualify for a mortgage, they may decide to proceed with purchasing regardless of geopolitical issues.

Should you have any questions or need assistance with a real estate purchase or sale, our title company, Weston Title & Escrow, Inc. is able to help you and can be reached at 954-466-4415. Should you have any legal questions about a potential purchase or sale or another legal matter, our team at Oppenheim Law can be reached at 954-384-6114.