Brexit! Tomorrow, June 23rd, Britain votes to stay in or leave the European Union. Clare Trapasso at Realtor.com writes, “Home buyers on American soil have enough to worry about without losing sleep over whether Britons, our neighbors across the pond, will vote to leave the European Union on Thursday.
But a Brexit could spell trouble for U.S. buyers as more wealthy foreigners, concerned about the uncertainty in the United Kingdom, drive up prices on American properties by racing to scoop them up, according to the International Business Times. The effect could even trickle down to Americans looking at starter homes, according to one expert.
“Typically, younger purchasers need a mortgage” to become homeowners, National Association of Realtors® Chief Economist Lawrence Yun told the Times. “If they have to compete with foreign buyers with all cash, which hinders first-time buyers from getting their home.”
Foreign buyers invested about $80 billion in U.S. real estate last year, according to NAR. About 2% to 3% of all U.S. real estate is controlled by foreign investors, Yun told the Times.
The most foreign buyers hailed from China, at 16%, with Canada close behind, at 14%. About 9% of buyers were from Mexico, followed by 8% from India and 4% from Britain.
Most of these folks are investing in luxury real estate, worth about $15 million and up,
If Britain does vote to leave, markets may react positively or negatively, but keep in mind that it will take nearly three years to work everything out and sign the papers. In the meantime foreigners prefer luxury properties in the big, major cities.
I suspect that interest rates, the value of the dollar versus other currencies, the world economy, the strength of the U.S. economy, and the upcoming national elections will have more effect on local real estate conditions than Brexit.
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