Could a ‘Brexit’ Be Bad News for U.S. Home Buyers?
Could a ‘Brexit’ Be Bad News for U.S. Home Buyers?
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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, that hinders first-time buyers from getting their home.”
Now, a Brexit may not come to pass. Recent polls have the U.K. nearly split down the middle with just slightly more voters, by a percentage point or two, leaning toward remaining in the union.
If it does happen, rich foreign buyers hungry for U.S. property are likely to head to popular housing markets such as New York; Washington, DC; Miami; Los Angeles; and San Francisco, according to NAR. They might also head to Chicago, Dallas, and Florida’s Tampa Bay.
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, New York real estate attorney Edward Mermelstein told the Times. Therefore, unlike Yun, he’s doubtful these well-heeled buyers will be competing with first-time and cash-strapped millennial buyers.
In addition, fewer British buyers will probably be interested in acquiring foreign residences, predicts New York–based real estate appraiser Jonathan Miller, of Miller Samuel. They’ll be dealing with their own problems closer to home, he said.
But buyers from the rest of the world may steer clear of London and head for markets like New York and San Francisco instead.
About three weeks ago, New York–based luxury real estate agent Dolly Lenz started receiving calls from foreign investors looking into unloading their London properties and buy up more real estate in places like New York, San Francisco, and Miami. It could lead to even higher prices in the big cities, particularly along the coast.
“It could affect local buyers who have to compete with the buyers, who are very sophisticated and have cash ready to go,” Lenz tells realtor.com®.
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Source: Real Estate News and Advice – realtor.com » Real Estate News