I hold both a UK and a US passport, and I was quite shocked to wake up on Friday to realize that the citizens of the UK narrowly voted in favor of severing economic and political ties with the European Union. Whatever your personal opinions on Brexit, you’ll be curious as to how Brexit impacts the value of your US home(s).
Here’s my take so far, and since the UK’s relationship with the EU is going to take several years to unravel, I want to focus on what we know rather than on speculation.
Will My House Price Drop As a Result of Brexit?
For most of us, the value of a US house is largely immaterial – I’ve never had a US house – only a Texas house, and then only Austin Texas houses. So while the average US price may move up or down, unless I’m moving states, I’m mostly concerned about my house(s).
There are a couple of factors which will impact house prices:
- How much money do people have to buy houses?
- What are mortgage interest rates – the factor impacting affordability of house payments?
- Will buyers still qualify for mortgages?
If you had money in the stock markets on Wednesday, it is worth less in paper terms today.
If you are looking for a mortgage, rates are only 0.125% lower than they were a week ago (roughly speaking), so they are a touch more affordable, but nothing significant.
If you were going to raid your 401(k) for a down payment, then you might not be able to get as much out as you’d thought.
One other thing I know is that with real estate being so slow moving (compared to something like the NASDAQ) that it’s going to take time to observe the change – it’s no use waiting for the S&P Case-Shiller indices to tell you what has already happened. Talking to your local REALTOR is probably going to give you the best idea of what the market is doing right now.
What’s Happening to Austin Real Estate?
If you consider the levels of inventory in Austin, Texas (shown below), there just isn’t any to speak of – 1.9 months of inventory in the City of Austin as of May 2016 is still a record low level, though it is climbing.
So that’s what we know for sure.
To put on my speculating hat just for a little, we might expect there to be a little fear and uncertainty around the market. Less so than the Europeans are seeing, but some nonetheless. From what I’ve seen as a REALTOR, fear tends to slow down decision making in buyers. So demand may drop. The astonishing lack of inventory might start to rise towards a balanced market between Austin home sellers and buyers.
How Should I Price My Austin House?
There’s only one way to successfully price your house, no matter what the market. Price to where the market is going.
In a rising market, choose a price above the recent comparable sales. In a cooling market, be prepared to price realistically.
As REALTORs dealing with buyers, sellers and other agents every day we can give you a take on the sentiment which is a lot more direct way of finding out what’s happening in today’s Austin real estate market than waiting for the statistics to come out.
If you would like to know more about buying or selling a home in Austin, please call us at 512 215 4785