Back in 2008, before the financial crisis, we heard a story about a Manhattan real estate shop that was listing its prices primarily in euros because folks in Europe were the only ones who could afford real estate here, helped in large part by the strength of their currency.
It’s possible the story was apocryphal.
Anyway, we’re definitely seeing the opposite now.
Over at UrbanDigs, broker Noah Rosenblatt Writes:
‘Euro’ Outta Here! Foreigners Lose Purchasing Power
OK so my headline could be a bit better. The reason I have fewer real time reports from the field is that most of my clients that intended to purchase a new home, already have. I have seven deals done in the last two quarters, three of which sold and four of which are still pending. Currently I have two active negotiations ongoing with a third on its way. But my schedule is no where near as hectic as it was for the first three months of 2010. That means, I am not out there viewing property and submitting offers as actively as I was for the past 6-8 months or so – as many of my clients are aggressively looking for months before ultimately signing a contract for their new home. However, I thought it would be interesting to see how the dollar’s rise might affect a foreigner who might be looking to buy in our market over the past few months. The findings may intrigue you.
Rosenblatt then walks through the past several months of EUR/USD and GBP/USD fluctuations and notes:
Based on currency trends over the past five months, look at how much less house an investor with Euros can buy right now of US assets – including Manhattan real estate! In this case, the foreign investor can buy $132,100 LESS HOUSE! All this because of the rising value of the US dollar! If it were British pounds and the same time period, the 1M pound investor would see a $124,000 reduction in purchasing power. All on currency trends alone.
Put this together with rising interest rates, and the ongoing threat from Fannie and Freddie, and the the prospect of a strong recovery in Manhattan housing looks dimmer.
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