Great Britain’s vote to leave the European Union, also known as Brexit, shook financial markets to the core leaving investors scrambling. There was a definite flight to quality into US Treasuries as the 10 Yr note yield fell instantly as the vote was announced. We answer the question, “Could Brexit benefit Southwest Florida home buyers?”
Could Brexit Benefit Southwest Florida Home Buyers?
The answer is yes, it is already benefiting many borrowers. Since Brexit rates are down about 1/4% to ½%. This works out to about 6% more purchasing power for the same payment in one week’s time. In other words, a buyer has two choices. They can either step up about 6% in purchase price and not have the payment cost them any more, or they can purchase the same amount and spend less per month doing it.
This helps more buyers qualify, so it can help sellers too. We have a listing in Bella Casa that has Open House Friday 5:30-7:30 and Saturday 5:30-7:30 July 8th and 9th. It is 3 bedrooms and 2 baths and is listed at $185,000. Before Brexit we needed a buyer that qualified for the full $185,000. Today we could find a buyer that qualified for a maximum $174,000 just last week and make that deal happen and it wouldn’t cost the buyer any more.
In the higher price ranges it’s even more dramatic. Essentially borrowers just got either a financing discount or a purchasing boost for the same money. The buyer definitely wins, and one could argue sellers do too because now there are more available buyers for their home.
When times are uncertain investors flock to tangible assets or quality. Good examples of tangible assets are gold and real estate. Both can fluctuate in value but real estate can be rented out. It’s hard to do that with gold. The EU may not be done losing participants either, and if anyone else bows out like Great Britain did it could spell more uncertainty for the markets.
Gold rose and oil fell after Brexit. Gold was considered a flight to quality while oil fell because people feared a business slowdown. Sometimes the markets are fueled by consumer confidence while other times they’re fueled by opportunities.
We could have fewer British and European buyers in the US market which could hurt some local markets while at the same time helping many buyers. Many times there are competing forces at work and so it is difficult for anyone to accurately predict which force wins out and who the winners and losers will actually be. Just keep in mind there are opportunities in situations like these and the news isn’t always grim.
If you’re thinking about buying in this very low interest rate market we’ve got the website for you. www.LeeCountyOnline.com We think you’ll like it because it is updated with all the listings every 5 minutes. Most of the other sites take days and still don’t always get it right.
Sometimes days is too long. The best properties go fast. Timing is critical. If you’d like to take advantage of this financial situation, give us a call at 239-489-4042 or register on our site. We can get you in touch with a lender who has rates below 3% as of the time we’re writing this article.
If you’re a seller, we have lots of buyers and may have a buyer that’s looking for a home like yours. You can call us too. If we don’t currently have a buyer, we have marketing that attracts buyers. Give us a call and let’s see if we can get you to your next goal.
Good luck and Happy House Hunting!
Next weekend we’ll feature an Open House Extravaganza, so stay tuned.
Welcome to the Ellis Team Seller’s Club. Each month we inform sellers in Southwest Florida trends and data to make the best decisions. E-Mail us if you’d like to be included in our Seller’s Club.