What Does the Brexit Mean for American Real Estate?

It didn’t seem possible, but on Thursday, June 23, thousands of Britons flocked to their polls and voted for a British exit, or “Brexit,” from the European Union. The decision was followed by an immediate shift in the global economy. Minutes later, the British pound decreased in value to a low that was only last seen in 1985. Soon after, the British Prime Minister resigned, and the global stock markets took a hit.

What Does the Brexit Mean For American Real Estate?

Until Britain formally leaves the EU (there is still a small chance they will not), it is hard to say exactly what will happen, but there are some things we know, and other things we can assume based on educated guesses.  

• Demand May Rise – With the decreased value of the pound, foreign investors eager to place their money in a safe place may begin to unload their British properties and search for investments elsewhere. No market is a safer bet than the current United States real estate market. This could easily lead to an increased demand for real estate, especially in big metropolitan areas.

• Home Prices May Rise – An increase in demand almost always leads to an increase in the price of homes, though it is unclear how high these prices could go.

• Mortgage Rates Dropped – Following the Brexit, foreign investors immediately began looking for a safe place to hold their money. Some chose gold, some chose bitcoins, and others have put their money into America’s mortgage backed security markets. This has immediately dropped mortgage rates to an all-time low (but it’s impossible to say how long that will last).

Sellers: ACT NOW!

All three of these outcomes suggests a market that is extraordinarily favorable to sellers (and not so bad for buyers either)! With demand and prices up, and mortgages remaining low, buyers can purchase homes that are more expensive than they would normally be able to buy.

Sellers – Are you hearing this? Buyers can buy your home for MORE!

Buyers- Are YOU hearing this? You may be able to afford more than you anticipated!

So, thank you, Brexit!

This kind of occasion rarely happens in real estate – and it most likely won’t last long. Do you want to find out how much your home is worth? It may be a good time to sell. Talk to ARC Realty today.