While the debate rages on about sanity of the British vote to secede from EU, we here across the pond are seeing the effect of the BREXIT on real estate. Proof of the global nature of our economy can be seen in the immediate effect on our stock market, as well as the positive impact on our real estate market. Here in Phoenix we’re seeing benefits to both buyers and sellers and here is a simple explanation of why that is.
Many have been anticipating a rise in interest rates. The Fed has given every indication that our economy has recovered to the point at which we don’t need low interests rates as an economic stimulus. However, now that the Brexit vote has introduced a significant amount of uncertainty into financial markets, we are actually seeing interest rates go down. Money, which has been cheap for the past many months, is now even cheaper. It’s a good time to borrow that cheap money to buy that dream home, or invest in real estate to build wealth. Those who have not diversified their investments to include real estate, are feeling the sting of the impact of world events on their stock portfolio.
For sellers, continued low interest rates allow buyers to purchase more home at higher prices creating the space for price appreciation. An added effect is the investment in US real estate that is anticipated by off-shore investors who will be moving assets out of increasingly uncertain markets. At the present time, and at the middle to low price points, we’re already seeing a shortage in inventory to meet demand. A continuation of those conditions, which we can anticipate with lower interest rates, results in higher prices. And while some would argue that this will lead to another housing bubble, I have some anecdotal information that may ease your fears.. We are NOT seeing appraisals supporting overly inflated values in the market. It seems we have struck a nice balance of reasonable appreciation based upon supply and demand, and common sense market valuations.
That’s my take on how the latest global economic events are having an effect on our little part of the world. And now that we’ve helped you navigate that, let us help you navigate your next sale or purchase.