As property appraisers, we’re hyper-focused on local housing market data and comparable home sales. However, it’s also important to understand how broader economic trends and international forces can trickle down to influence residential real estate values here at home.
The Economic Butterfly Effect In our increasingly interconnected world, national economies and foreign policy decisions don’t operate in a vacuum. Financial markets, trade policies, geopolitical conflicts, and macroeconomic factors thousands of miles away can create a ripple effect that ultimately gets priced into U.S. home valuations.
For example, consider how volatility in oil/gas markets driven by conflicts overseas impacts the costs of heating, commuting, and construction materials. Or how a manufacturing slowdown in a major export market reduces domestic jobs and spending power for would-be homebuyers. Sustained periods of economic weakness or uncertainty in Europe, China, or emerging markets can depress U.S. investment, company earnings, and consumer confidence.
At the same time, a strengthening U.S. dollar driven by safe-haven investing makes American real estate more expensive for foreign buyers looking to purchase properties stateside. While the inverse scenario of a weakening greenback boosts purchasing power for international investors interested in U.S. housing.
Interest Rates: A Powerful Universal Force One of the primary mechanisms by which international forces get translated into home prices is through impacting U.S. monetary policy and interest rates. As the world’s global reserve currency, any number of overseas factors can influence how the Federal Reserve sets its target rates and the costs of borrowing for domestic homebuyers.
Rising interest rates quickly increase the monthly costs of mortgages for purchasers, cooling demand and pricing some buyers out of the market. On the flip side, lower rates make home financing more affordable and accessible, fueling competition for available inventory.
Staying Ahead of Global Dynamics While our property assessments are fundamentally rooted in local data, responsible appraisers like our team at Infinite Focus must also maintain a periphery awareness of national and international developments. Trends in commodity prices, inflation/deflation levels, consumer health, foreign capital flows, trade dynamics, and more can all provide signals about where the housing market could be heading next.
We follow economic indicators across the globe to supplement our hyper-local expertise and provide the most reliable, forward-looking valuations possible. Homeowners can rely on our appraisals to reflect property worth through an internationally-informed lens.
So whether it’s ripple effects from supply chain disruptions, economic sanctions, or foreign investor interest, our appraisers understand how to contextualize world events into their assessments. We aim to deliver trusted appraisals grounded in the realities driving today’s housing markets.