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Could Brexit Actually Be a Positive for U.S. Real Estate?

The surprising result of the U.K. referendum may offset other expected market effects this year.

The United Kingdom’s vote on June 23rd to leave the European Union left people shocked and the global markets took a large fall although they returned to normal after a few days.

Real estate is rarely impacted by external factors whether it is domestic or foreign. Stock markets are impacted immediately, real estate transactions require due diligence and will continue as scheduled. Real estate factors can also be offset if there is a struggle in one area but success in another. Even the U.K. real estate transactions were not effected by the Brexit.

Within about six months, you can expect to see some effects on real estate due to investors offloading British real estate assets. “You’ve not started to see any major, major changes because, like anything, the housing market usually takes a little time. With these kind of impacts, it needs to kind of filter down,” Calton says.

Industry experts actually believe that Brexit will have a postitive impact on United States real estate despite how other markets have been stunned or impacted.

  • Interest Rates remain low – The Federal Reserve has yet to increase interest rates due to lackluster job reports. Then with the brexit vote a month later they continued to hold off on increase rates. Inevitably rates are going to be higher eventually so now is the time to buy, lock in the low rates. Its also a great time to refinance. “We have people that have a 4 percent, 30-year fixed interest rate. And you think wow, that’s great, it doesn’t make sense to refinance. But when you can get a 2.5 percent, 15-year [rate], cut your term in half and your payment doesn’t go up much because you’re dropping your rate a point and a half – that’s what a lot of consumers are really picking up on,” Fite says.
  • More interest in U.S. property – As uncertainty grows over British and European economies, the United States real estate is expected to increase. “I see a small influx of foreign investors looking to move their money outside of the U.K. and Europe. But then again, there’s so many other things happening in the housing market in the United States,” Calton says. London real estate prices are usually twice as much as those in New York which can make New York a favorable location.
  • Stabilizing going forward – With the upcoming U.S. presidential election bringing new administration it is uncertain on how this will impact the markets and economy which could have an affect on the real estate market as well. The election could have a positive impact and continue to keep interest rates at all time lows.


Read the full article by Devon Thorsby :