Back HomeHow Should we Treat Real Estate Investments?
The decision is finalized, and the Brexit vote has made possible that the United Kingdom will leave the European Union over a 2 year period. Although the process is prolonged, the short term effects of this decision are already being felt on a global scale.
“The value of the pound dropped to its lowest since 1985, and the FTSE took a steep dive” (1). This affects the imports and exports between the United States and the United Kingdom and there will be less of a demand of US good over time, but will make it cheaper for Americans to buy goods from the UK (and travel to the UK).
For a quick return on investment, buying stocks and pounds at their lowest price in 30 years with the intention of exchanging for dollars in the future would be a wise investment.
However, “in the short term, markets will trade on emotion, so make sure you don’t end up becoming your portfolio’s worst enemy,” warned Bob Stovall, a U.S. equity strategist speaking to USA Today. He advised investors to “stay calm and carry on” with their long-term plans” (1).
The volatility in the British market has left the United States Real estate market, specifically that of New York City, a more attractive investment option. Foreigners will continue to flock to New York to invest in US Real Estate. This, in turn, could drive up real estate prices once more since there will be more competition and more people bidding on properties. “New York has always been a global city, and this will only become more true as wealthy foreign buyers who may have considered London are put off by this isolationist turn” (3).
On the other hand, the long term affects of this decision could be a European recession, which could turn into a global recession. The New York City real estate market will not then be immune to the effects of the Brexit then.
(1) The Real Deal
(2) DNA Info
(3) NBC New York
