The U.K. vote to exit the European Union will likely have a long-term impact on the world economy. In the short-term, U.S. real estate could be flooded with investors flocking to the States as a safe haven, and demand for the Miami real estate could rise.
Foreign households, who might have otherwise looked to London to buy, might turn to U.S. residential real estate, although U.K. citizens are among the top buyers of investment and vacation homes in the U.S.
If mortgage rates, which are already at historic lows, drop even further, that could help drive up sales of all types, including the residential side, of U.S. real estate.
“Mortgage rates will tumble,” says Greg McBride, chief financial analyst at Bankrate.com, “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.”
Last week, the 30-year fixed-rate mortgage averaged 3.46 percent, near the lowest average since late 2012, Realtor.com reports.
“Lower rates produce lower monthly payments and greater buying power. Those who are well qualified can afford a home that’s eight percent more expensive than at the beginning of the year,” says Jonathan Smoke, Realtor.com’s chief economist. “That’s more than enough to offset the rise in prices during that time.”
The kind of commercial real estate international buyers purchase really depends on where they’re coming from. The Chinese buyers tend to be very focused on office buildings in high-profile markets. International buyers make up 36% percent of all South Florida real estate sales: They accounted for $6.1 billion sales in real estate deals accounted for all transactions in Miami-Dade and Broward counties in the past year, comprising one of the more vibrant corners of the local economy.
“Miami is the most international city in the entire United States,” says Teresa King Kinney, CEO of the Miami Association of Realtors. Her proof: More than half the residents in Miami-Dade were born abroad.
Despite tough economic conditions in much of Latin America and Europe, foreign buyers are continuing to invest in Miami, according to a report from the National Association of Realtors.
Many South Florida real estate agents are multilingual or hail from a foreign country and thus, understand the language and culture of their clients.
Realtors try to polish their skills in understanding other cultures, including Asians. While Asians currently make up a small share of buyers in Miami, many locals expect that to increase with the increased trade expected at Port Miami once the expansion of the Panama Canal is complete.
In the last few years, according to the NAR study, 81 percent of South Florida’s foreign buyers paid cash, and 72 percent purchased a condo or townhouse.
After Brexit and with economies in a free-fall, our bet is for most people to secure their money in the real estate market, particularly in South Florida.
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