The UK’s exit from the European Union – also known as the “Brexit” – has had an immediate impact on global stock markets. But what about the real estate market? How can something that happens in another country impact that? Here are some changes that could happen to the Denver real estate market.
1. LOWER INTEREST RATES.
The Brexit vote threw stock markets into a sell frenzy, causing stocks and many currencies to take a tumble. This will be taken into consideration when the Federal Reserve decides what to do with interest rates. Most likely, interest rates will be lowered or remain the same given the instability of the stock market. This means home buyers will be able to afford a more expensive home in their budget. Also, if you were thinking about refinancing, keep an eye on interest rates and strike when they start to slip.
2. HIGHER HOME VALUES.
Because of the lower interest rates, home sale prices will increase since there will be more qualified buyers for the same home. This is great news for home sellers, but may not be great news for home buyers. Again, if you are considering refinancing, a higher home value will be advantageous if you’re looking to lower or remove your mortgage insurance payment.
3. INCREASE IN FOREIGN BUYERS.
According to economists at AXIOMetrics, the US real estate market has seen an influx of foreign buyers due to increasing confidence in the market. In addition, Britain used to be a a great place to buy real estate because of the generous tax advantages. However, new laws in the UK have increased taxes on real estate and the Brexit has made the UK economy unstable. The US real estate market is expecting to see an even great number of foreign buyers flocking to cities with solid economies. Denver will be high on their list due to a growing economy and inexpensive real estate compared to cities that traditionally attracted foreign investors (New York, Los Angeles, San Francisco, Boston).
4. FEWER FOREIGN TOURISTS.
The day after the Brexit vote saw a number of currencies drop in value, while the US dollar remains strong. For Americans, traveling abroad will be cheaper than ever. Unfortunately, expect a dip in foreign tourists coming to the US because of the strong dollar. Expect to see Denver’s tourism industry take a hit as well as the short and long term real estate rental market.