So the big question is: How will Britain’s “#Brexit” decision to leave the European Community impact the South Florida real estate market?
First and foremost whenever there is international economic turmoil, such situations impact the U.S. and International market one way or another. Such events are typically called exogenous events and can have an undue impact on the real property market. Sometimes it’s like a top that is spinning perfectly when a slight breeze makes the top begin wobble.
In 2005, the scenes from Hurricane Katrina’s devastation in New Orleans had an impact on the entire real estate market… nationwide and particularly in Florida. Then again, we were in a tremendous bubble… but just did not know it at that moment in time.
The quick answer is simple: The non-luxury end of the market that is not as prone to international cash buyers and thus will likely be less affected by the #Brexit unless the stock market continues to trend downward or continues to remain extremely volatile.
On the other hand, the U.S. Dollar will likely continue increasing in value compared to other currencies, and thus international buyers will find the luxury housing end of the market very pricey in their currency.
Further, high-end buyers may be the first to feel the inverse wealth effect if their portfolio values truly are shrinking due to a downward trending stock market. That down payment may have partially vanished.
Time will tell. But as previously anticipated the first quarter in the luxury high-end South Florida real estate market was weak due to the high value of the US dollar and the low cost for oil among other factors.
So if the dollar continues to increase in value against other currencies, it may just be the right time to take that long-planned Euro road trip.
From the Trenches,