War on the Korean Peninsula - what would happen to the real estate values in the U.S.?
It is late Sunday evening and I’m in New York City watching CNN discuss war on the Korean Peninsula. It got me thinking, what would happen to US real estate prices should this situation erupt into full blown war? Of course that’s a difficult question to answer, yet we could look to some indicators directly related to real estate and extrapolate.
The European debt crisis is teetering on the edge and will be something we need to watch carefully in 2011. A Korean war would undoubtedly destabilize that situation further creating more pressure on our global financial markets. In the short term that would likely drive mortgage interest rates down sharply, and possibly drive more buyers into the market. A cautious note however, already low interest rates haven’t had a significant effect on the buyer’s motivation to date so this might not help much.
Another war would increase the level of uncertainty people have about the overall health of the US economy and their own financial situation (their job) which would likely lead to fewer buying decisions and a decrease in demand overall. There might however be a few markets across the country that would benefit from another war - for example Washington DC with an influx of people and money - but that would be temporary.
Long story short, at best a Korean War might stall our overall recovery, with pockets that traditionally benefit from military activity seeing positive gains. At worst, it could be an economic domino that will push our long term real estate recovery further down the road.
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