How Brexit Could Affect the Property Market in the U.S.

Brexit Home Prices U.S

While we can say that most U.S. citizens do not really care whether Britain is part of Europe or not, these people are concerned about the housing industry and mortgage rates.

If you think if the Brexit vote could possibly affect both areas, well, it has already started its impact.

This Brexit vote caused perturbation and was probably one of the reasons that prompted the Federal Reserve’s in June to not increase the country’s interest rates.

By law, the separation will not be finalized for several years, still the real estate and government sectors are feeling anxious now.

The vote sparks serious questions regarding what will happen to the economic system and international security. In other words, Brexit brought us a lot of reluctance and concern.

Buying and selling have become riskier. Lending has also got riskier, all this because the market becomes more chaotic and unpredictable.

As markets lost their confidence, it demands a great amount of willpower to acquire a major property such as a house.

But all things considered, the economy of U.S. stays strong, even when the news seem bad today. In fact, Central London has been the safe place for many wealthy buyers in the housing market for quite some time.

Approximately three-quarters of all the newly constructed homes in central London in 2013, were purchased by non-Brits.

About 44% of these people were from Middle East, China, Russia, Singapore and Hong Kong.

Now that Britain is planning to stop its European Union membership, the US brokers of luxury real estate are predicting that foreign investors in the London market will get rid of their properties and buy investments elsewhere.

Do not expect just yet an overflowing of money from the London real estate market into the United States.

On Friday, the British pound obtained a tremendous beating, which makes the U.S. real estate property more steeply-priced to the U.K. purchasers.

After all, 44% of the exports from Britain go to the European Union, and cutting the connection could result in a drag on the economic system of U.K. within the next year or so.

An increase in the dollar would likely impact the American exports, at the same time, it could put strain on long-term mortgage interest rates and even reaching new low records.

Therefore, a borrower should not wait to secure your rate, considering that this circumstance may not last for a long time.

If mortgage rates fall even further, that could boost sales of  all U.S. real estate, which include the housing market.

Overseas homeowners who might have considered London for acquisition could possibly choose the residential real estate in the U.S.

However, the U.K. residents, who are among the top purchasers of investment and vacation houses in the America could withdraw.

Will this affect the cost of homes?

Not really. The price growth across the country might slow down soon.

Those investors in the stock exchange do not the same amount of money as they had before, making these buyers scared.

But mortgage loans are going cheaper, providing them with more incentive.

What will happen to the interest rates?

Loans are likely to become more affordable. Home loan rates normally drop whenever the Treasury rates decline.

Treasuries certainly took a plunge as investments made their way out of the U.K., and headed to the less risky U.S. market.

With this, lenders are prepared for a rush of remortgage applications.

Do I delay home acquisition?

The majority of financial experts predicted a decrease in the U.S. growth  following the Brexit vote.

But then again, the employment growth is doing good while unemployment is low. No one can tell how long it will continue.

In the years ahead, companies may become more careful when it comes to hiring and doing investment.

Buying a home is personal. If you have the money and all set to purchase a house, then Brexit by no means stop you.

Do I postpone selling?

Brexit will not change the fact that houses are in demand and not enough are available for everyone.

The unexpected pivot we are experiencing now all over the world could make the buyers pause to assess things first.

For sellers, that could result in properties sitting on the market much longer, getting fewer sales and longer time to close a deal.

What about REITs

REITs can also gain from increasing commercial property values, since overseas investors still put money in the office, apartment space and retail industry in the U.S.

They were doing that for some time, but Brexit will surely speed up the pace, particularly with the investors from China and Middle East focusing on the brick and mortar markets.

Jenny Lorence

Jenny Lorence - Finance Reporter at RateTake
Jenny writes and researches mortgage information while being an inspiring short story writer. Her passion comes from being curious what finance market offers.
Jenny Lorence

Written by Jenny Lorence

Jenny Lorence

Jenny writes and researches mortgage information while being an inspiring short story writer. Her passion comes from being curious what finance market offers.