Following Wednesday’s vote in the U.K. Parliament to postpone the March 29 departure date, the Brexit process is likely to drag on even longer. Despite Brexit taking place across the ocean, how will the process impact the housing market in the U.S.?
“A no-deal Brexit would probably hurt U.S. home sales in 2019," says Chief Economist Danielle Hale of realtor.com. "The slowdown in global economic growth centered in the U.K. and Europe would likely cause the U.S. economy to soften. That would lead to lower job growth and less income growth. Both are really important drivers for people looking to buy homes."
According to realtor.com, Brexit could lead to lower mortgage rates for U.S. homebuyers. Instability in the U.K. may lead to British investors moving to safer investments such as U.S. Treasury Bonds, pushing rates down.
"We definitely saw the housing market slow when mortgage rates got close to 5% at the end of 2018," says Hale. "If Brexit does hold mortgage rates down, it could help power some additional home sales this spring."
Additionally, sellers may find British real estate investors looking to buy in the U.S. to avoid instability, especially among luxury real estate.
"The British will have a harder time buying property in Spain, Italy, and other parts of Europe," says Lawrence Yun, Chief Economist of the National Association of Realtors. "They could look to the U.S. as an alternative destination to buy.”
"Many folks who have been based in London over the last 20 or 30 years are shifting their interests into the United States," says attorney Edward Mermelstein of the New York City-based One and Only Holdings. His foreign investor clients have been buying up apartment buildings in and around New York City over the past six months as a result of Brexit.
"When they're selling in London, they're buying in New York," he says.
Worst case scenario, though, is Brexit leads to an economic recession in Britain and in the E.U.
“It could have a negative ripple effect to the U.S.," says Yun.
Find more at Realtor.com.