If you had to pick one industry in the U.S. that’s feeling the impact of those Federal Reserve rate hikes, it would be housing. Existing home sales are down 28% since last year, according to the National Association of Realtors — which is a Marketplace underwriter. 

The thing is, we’re not the only country fighting inflation. Central banks from Canada to Western Europe and Latin America are also raising interest rates. So what does that mean for their housing markets?

For the last two decades, Canadian housing has boomed. A home in Toronto or Vancouver is at least as pricey as one in New York or San Francisco. And since the pandemic, prices in some markets have shot up more than 50%.

But a correction is coming, said Tony Stillo with Oxford Economics. “We’re looking for a 30% contraction in house prices across the country. It’s already well underway.”

The Bank of Canada has raised interest rates pretty much in lockstep with the Fed. But unlike the 30-year fixed in the U.S., Canadian mortgages lock in interest rates only five years at a time. And variable-rate mortgages are very popular in Canada.

As interest rates rise, Stillo said, Canadian homeowners are going to feel the pinch more directly than their American neighbors. He’s predicting a moderate recession.

“We think the economy is that much more sensitive to these hikes in interest rates,” Stillo said.

The European Central Bank is also raising rates, which means the hottest housing markets there are also cooling.

“In Northern Europe, in parts of Germany, in some parts of the French market, we see a downturn,” said Nicolas Véron, an economist at the Peterson Institute for International Economics.

While monetary policy is slowing demand, Véron said immigration can be a counterweight. For example, “a number of places in Germany are getting a lot of immigrants. When lots of people enter the country and want a place to live, that stimulates demand for housing.”

Immigration and remote work are also helping to buoy the housing market in some parts of Mexico. 

“Cities like Monterrey or Reynosa or Tampico, cities close to the border,” said Maricela Pereyra with the Mexican Association of Real Estate Professionals. “And all these people who live in the United States are interested in buying here in Mexico.”

Mexicans are increasingly interested in renting versus buying, Pereyra added. The country’s central bank recently raised its benchmark interest rate to 10%.