Is BREXIT the real estate buy signal the US has been waiting for?
The world awoke this morning to realize that the long dreaded fear of Britain exiting the European Union has not only manifest into reality but appears to be having a harsher world economic impact than anyone expected.
A referendum vote which resulted in 52% to 48% in favor of Britain leaving the European Union despite Northern Ireland, London and Scotland has shocked the world and left many uncertain what this really means.
As a result Prime Minister David Cameron will be stepping down in October creating even more uncertainty around who will be Britain’s next Prime Minister.
The British pound feel to its lowest levels against the US dollar since 1985 even as the Bank of England announced that it is ready with £250bn of additional funding set aside to ensure market stability is maintained.
What will the ripple effect of Britain’s exit be on the US real estate market?
No one yet knows all the implications of such an unprecedented event or can clearly predict the fallout that will ensue over the next several years as Britain’s exit becomes a reality but none seem to argue that the near term confidence in Britain and the European Union as a whole seems to have collapsed overnight. As international investor confidence dwindles many are again turning to the US as a safe harbor for their money.
Given the intricately intertwined global financial markets it would be near impossible for anyone (yes even the 1% ers) to determine the true financial implication leaving many hesitant to pull the trigger. In times like these that often means sitting on cash or diversifying your portfolio.
With the Euro falling more than 2% today versus the Dollar this could signify the beginning of a mid to long term trend which would make the US real estate market that much more attractive.
Where are Europeans buying?
By now everyone knows that location, location, location is often the key to real estate investment, but if there had to be a runner up it sure would be climate. Although investors will continue to be attracted to California & New York, Florida is posed to continue being among best places to invest in the US simply because of the beautiful year round weather.
Taking into account U.K. citizens historically are among the top foreign buyers to purchase residential real estate in the US and throwing some fuel on the fire with a drop in mortgage rates could turn out to be a perfect storm brewing for another record year for the real estate market in South Florida and throughout the US.
The only questions which seems to remain is, how much money will Europeans actually have to spend after dealing with this huge mess at home?
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