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How Brexit Could Affect Bay Area Real Estate

by | Feb 28, 2019 | Blog

As the scheduled date for Brexit draws closer, many experts are concerned about the effects this major event could have on the U.S. real estate market. Opinions are divided on the likely consequences of Brexit for the Bay Area real estate marketplace. Here are some facts about Brexit and some trends to watch for in the next few months.

What Is Brexit?

Brexit is short for Britain Exit, which refers to the proposed withdrawal of the United Kingdom from the European Union, more commonly referred to as the EU. Brexit is scheduled to occur on March 29, 2019. It is possible that Brexit could be postponed or that Brexit could be canceled by the UK unilaterally, especially if a second referendum is scheduled before this date.

Keeping a close eye on the ongoing negotiations and decisions made about Brexit can help you manage your real estate investment activities in the most prudent and profitable way.

Current Effects on U.S. Real Estate Markets

The commercial and residential real estate industries are already showing signs of instability because of uncertainties about the potential economic effects of Brexit. UK investors are a significant power in the global marketplace.

Fears that Brexit will limit the ability of these investors to participate in the U.S. real estate market have already created some stress on the luxury home and high-end commercial property marketplaces, especially on the West Coast.

The Potential for Increased Investment

The chief economist for the National Association of Realtors (NAR), Lawrence Yun, believes that a loss of confidence in the UK economy could increase demand for U.S. properties, especially those already in demand. This could drive property prices upward for Bay Area real estate properties.

For many investors, maintaining a solid presence in this area can help to build a foundation for future profitability. If you are planning a move into this real estate market, taking steps to acquire properties before Brexit could help you achieve higher profits for your property investments.

Uncertain Effects on Global Investments from the UK

If Brexit does occur, it will likely have a chilling effect on the ability of UK investors to engage fully with the economy of the European Union. This could go in one of two ways:

  • Investors from the UK could look to the United States for favorable investment conditions and reduced dependency on the EU, or
  • These same investors may tighten their belts and prepare to ride out the predicted unfavorable economic conditions in the UK after Brexit.

Since no deal has been reached with the EU on the precise terms of Brexit, it is difficult to identify the way in which UK investors will react when the transition occurs. It is also possible that the UK will find a way to move forward without exiting the EU. If this happens, it could conceivably be back to business as usual for Bay Area real estate investors.

Regardless of the effects of Brexit, finding the right financing will still be critical to your continuing success. Exploring the options available from alternative lenders, like ReProp Financial

p can help you make the most practical and profitable decisions for your real estate investment portfolio.

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