How Does War Impact Real Estate?

When global headlines turn grim, local housing markets still have to make sense of it all. In early March, Selling Greenville tackled a timely question: what actually happens to the Upstate market when war—or the threat of it—dominates the news cycle? The episode looks at the Russia–Ukraine crisis through a Greenville, SC lens and distills how uncertainty can ripple through mortgage rates, buyer demand, new construction, and pricing momentum.

Understanding How War Impacts Real Estate?

How does war impact real estate? The core dynamic starts with rates and risk. In periods of geopolitical tension, investors often flee to “safer” assets. That flight can put downward pressure on mortgage rates. At the same time, war can amplify inflation pressures, which typically forces the Federal Reserve into action that pushes mortgage rates higher. Those two forces can tug in opposite directions, sometimes cancelling each other out.

Right before this episode was recorded (February 28), 30-year rates had surged faster than expected—knocking on the 4% door far earlier than many forecasters anticipated. They touched 3.92%, the highest since May 2019, before dipping to 3.89% as markets digested the new uncertainty. Whether rates drift down on safety-seeking or climb on inflation-fighting depends on which pressure dominates in the weeks and months ahead.

Applications blinked—demand may cool at the margins

Another early signal: new mortgage applications fell 13.1% week-over-week, hitting their lowest level since December 2019. That’s a national stat, but it squares with common sense. Higher rates can price out edge-case buyers or curb enthusiasm among those who were stretching for a payment. Refinances, naturally, drop quickest when rates rise.

Locally, Greenville’s market lens is simple: fewer applications could translate into a mild demand cool-down, not a collapse. The show repeatedly emphasizes that it would take an extreme scenario to knock the Upstate out of a market posture.

Prices: slowly ≠ falling

There’s a crucial distinction between slowing appreciation and falling prices. The episode underscores it: barring a global recession with widespread foreclosures, prices aren’t expected to go down. What could change is the pace of increases. After an era of double-digit jumps, a step down toward single-digit appreciation would look like stabilization, not weakness. For buyers, that could mean fewer bidding wars and a bit more breathing room. For sellers, it’s still a strong market—just one that behaves more like a market than a frenzy.

The Greenville lens: supply is still the boss

Even if demand cools a touch, the other half of the equation—supply—remains historically tight. Inventory is measured in months, and the local pattern has hovered in the low one-month range. If war-driven uncertainty and higher rates shave demand, inventory could drift into the low two-month range. That’s still a seller’s market by any definition. If such a shift happens quickly, some sellers might feel whiplash, but on balance, a modest normalization would be healthy.

Builders vs. oil, materials, and timelines

The conversation also flags a second-order risk: the cost of oil and supply chain disruption. Rising fuel costs push up the delivered price of materials. Builders who were already juggling volatile input costs could reintroduce the policies the Upstate saw last year—moving deadlines, adjustable contract pricing, and contract exit options if costs spike.

Why does that matter beyond the construction site? Because new construction sets the tone for the whole ladder. When move-up buyers can’t comfortably afford the new home they planned, they don’t list the one they’re in. That, in turn, leaves fewer starter homes for first-time buyers. In a low-inventory ecosystem, any kink in the new-build pipeline ripples outward.

Rates: the near path and the outer limits

The host’s read, framed as an expectation rather than a guarantee: it wouldn’t be surprising to see rates touch or exceed 4.5% at some point this year. Whether the Fed keeps pushing depends on how inflation evolves—and how much of that inflation is tied to war-related shocks. Past eras saw mortgage rates far higher than today, so the current move is notable but not unprecedented. The theme is preparedness, not panic.

If demand cools, what changes on the ground?

• Showings and offers: Instead of two days to decide, buyers could see listing windows stretch (think two weeks instead of two days).

• Bidding behavior: Fewer extreme bidding wars; more properties selling at strong, market-supported prices without runaway escalation.

• First-time buyers: A slightly better shot—especially if new construction doesn’t seize up and if inventory inches higher.

• Sellers: Still in the driver’s seat, but pricing precisely matters more when appreciation cools from “hyper” to “healthy.”

Not a bubble—just cause and effect

A key clarification from the episode: a hot market isn’t automatically a bubble. In Greenville, the demand has been real, not “artificial” demand fueled by reckless lending. Large down payments, a significant share of cash buyers, and tight inventory are structural factors. Without a wave of distressed sales—foreclosures and short sales—prices don’t fall; they simply rise more slowly.

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Bottom Line

War introduces crosswinds: flight-to-safety flows can nudge mortgage rates down, while inflation pressures pull them up. In Greenville, those forces play out against a stubbornly tight inventory backdrop. Expect the most realistic outcome—a moderation of appreciation and competition, not a reversal. Prices aren’t forecast to fall absent a true recession with distressed inventory. Keep an eye on rates, oil, and builder behavior; they’ll tell you whether the market is merely catching its breath or bracing for more turbulence.

Ien Araneta

Journal & Podcast Editor | Selling Greenville