How Will the US Housing Market Be Affected by Brexit?

How Will the US Housing Market Be Affected by Brexit

Let me first start by saying, “I have no clue.” Well, maybe SOME clue, but again, I’m about as good at predicting the future as you are. That being said, there are several indications that property values in the United States and the housing market overall will see a slight uptick, if not an all-out boom, at least in the short term.

1. The London market has taken a hit.

After the UK decided to leave the European Union, global investors are pulling out of the UK investment marketplace and are seeking American properties to stow their excess wealth. As more and more American properties are bought, renovated, rented, or flipped, the overall housing market increases. Property values rise as the lower priced homes are renovated. These investors are also buying vacant lots and building both residential homes and commercial buildings, thus adding value to areas they are located in.

2. The recent drop in mortgage interest rates.

Now, I have no idea how long these interest rates will continue to be subdued by the fallout from Brexit, but for the next few months the amount of people taking advantage of lowered rates will continue to increase, pulling the housing market up with it. The lower the interest rates are, the more buyers are able to afford on the same income, which results in buyers purchasing more expensive homes. Also the more people that are able to qualify for a loan, the more rapidly the housing market moves.

3. The volatile European stock market.

The more volatile the European and UK stock markets are, the more those investors look to stable alternatives elsewhere. Real Estate investing has long been regarded as one of the more stable investing options. Sure, occasionally investors will have to wade through an economic downturn, but property value always goes up over time. There has been quite a bit of stock market uncertainty following the UK’s exit from the European Union, especially in Europe. The American stock market experienced a slight drop the week after Brexit took place. However, it has now turned around and the American stock market is soaring. All of this will continue to support a healthy real estate market for investors as the European investment money flows out of the UK and into the US.

The negative effects of this historic event may indeed come, but for the time being it seems as though they are not in the near future. Of course, if the EU eventually falls apart and the global economy shifts dramatically in the next few years, we may be having an entirely different conversation. If you are a homeowner, now may be a great time for you to look into refinancing your current mortgage. If you are looking to become a first time homeowner, now may be a great time to lock in that low interest rate.

Time will tell, but it appears as though the real estate market in the US is going to be on the rise for the foreseeable future. Plan accordingly.

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Ed Fox

Ed Fox

Ed Fox works closely with partnership stakeholders and product leaders on business strategic planning, as Director of Technology. Ed leads the product and technology teams, directing operations while working with clients to ensure a successful development process and, when appropriate, integration with existing platforms. Ed’s specialty is aligning technology vision and strategy with product and business direction, and converting strategic plans into platforms that can grow in the market.