Real estate is a local phenomenon.  Every street in the country has its own local real estate market and that's why "national sales data" is useless.

A Cincinnati, Ohio home buyer doesn't (and shouldn't) care about property values in Boynton Beach, Florida.  Cincinnati real estate is entirely different and is driven by its own unique factors.

But we can get even more granular. 

On a neighborhood-by-neighborhood basis, Cincinnati is different.  A buyer in Symmes Township doesn't (and shouldn't) care about property values in Over-the-Rhine. 

Even on a street-by-street level, real estate markets are different.  Avant Lane is very different from Snider Road.

This is the biggest reason why national home sales data is useless to home buyer and home seller -- "national" is as un-specific as you can possibly get.  It's like saying that movies had a terrific year at the box office when that's not entirely true.

Yet, despite it's autonomy, the hyper-local market can be heavily influenced by the global political arena.  This is about as un-local as you can get.

Geopolitics impact real estate markets because mortgage rates are highly susceptible to political turmoil.  Witness the assassination of Pakistan's opposition leader last week.

Here are some quick facts on Pakistan:

1. It has nuclear capabilities
2. It is located on or near several important oil pipelines
3. It is in a state of political unrest

Any instability in Pakistan threatens the economies of a host of other nations.  After the assassination, an investor's risk assessment for the global economy changed in an instant.

And this is how local real estate markets get helped.

The U.S. economy is the world's largest marketplace many time overs and so when investors want safety, they move their money to Wall Street and they tend to buy bonds. 

This is alternatively called "safe haven buying" or "flight-to-quality".

Safe-haven buying includes mortgage bonds, of course, and mortgage bonds set the interest rates offered on home loans.  Therefore, mortgage rates fall as demand for mortgage bonds picks up.

In general, the greater the political uncertainty worldwide, the more downward pressure on mortgage rates.

It's not cool to root for death, plague, or war, but when it happens, mortgage rates tend to benefit.

(Image courtesy: State Department)

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Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.