How will the Brexit Impact the U.S. Housing Market?
The answers to your questions about the Brexit and U.S. real estate are here!
The United Kingdom’s decision to leave the European Union has left many U.S. home owners and buyers confused as to how this decision may impact the U.S. housing market. Should you hold off on making a major move? Is now a good time to invest in housing? Is it still a strong seller’s market? There are many questions that have come up and many different opinions on the subject have circulated recently. We’re here to simplify.
The Federal Reserve did not raise interest rates in June, and cited the uncertainty caused by the Brexit and fear of a weakened global economy as a main reason. The National Association of Realtors Chief Economist Lawrence Yun, stated that he believes many foreign investors will now look to buy U.S. property: “Demand for U.S. real estate could rise if global investors view America as open to global business.”
The increased demand will no doubt result in the value of the dollar increasing. As The Washington Post reported: “Brexit has spawned the recent bout of volatility in global financial markets. That has anxious investors scurrying for safety – and few assets are safer than U.S. Treasuries. High demand for government debt pulls down interest rates.”
Low Mortgage Rates
Though the rise in the dollar could possibly hurt U.S. exports, it’s good news for buyers as mortgage rates are predicted to continue plummeting following the Brexit. “Mortgage rates will tumble, possibly hitting new record lows. If you’re a borrower, don’t wait to lock in your rate, as this opportunity may not last long,” said Greg McBride, Chief Financial Analyst at Bankrate.com.
While mortgage rates are already at historic lows, the drop will likely result in even more real estate sales. Buyers will now find it easier to qualify for loans and thus be able to check off home ownership on their list of goals.
What will happen to home prices?
Home prices are currently very high across the country, while inventory remains at record lows. This has resulted in a market that’s very favorable for sellers. Many homes are selling above asking price with multiple competitive offers. With low mortgage rates and the possible influx of buyers, it makes sense that the increased buyer demand would only strengthen the seller’s market. While this is very likely, it is also possible that home prices will decrease as a result of the stock market losing value. However, this is more likely to affect the luxury real estate market. The weakened stock market will likely not play as large of a role in traditional residential real estate and Brexit is not expected to alter the current high demand for homes.
It’s too soon to let Brexit completely alter your plans to buy or sell a home. So far, the effects on the U.S. housing market are not expected to be negative. If anything, Brexit will positively impact the U.S. market. Record low mortgage rates will make home buying easier, and increased demand, both in the U.S. and abroad, will likely drive up home prices. If you’re wondering if it’s still a good time to put your home on the market, the answer is ‘yes.’