Dive Brief:
- The United Kingdom's decision to leave the European Union, an action dubbed "Brexit," has already affected the U.S. housing market, the Detroit Free Press reported.
- Uncertainty before the Brexit vote is most likely the reason the Federal Reserve decided not to raise interest rates in June, and, according to the National Association of Realtors Chief Economist Lawrence Yun, the U.S. could face an influx of foreign buyers looking to pull out of the U.K.
- Low mortgage interest rates, pushed even lower by the Brexit decision, have caused more homebuyers and homeowners to investigate home loans, and online lender Quicken Loans said its Rocket Mortgage site has seen a 30% increase in traffic.
Dive Insight
Despite low mortgages rates, losses in the stock market could result in investors' choosing to wait out the effects of Brexit before buying a home. Depending on how long the shake-out lasts, a pullback in homebuyer activity could result in lower home prices eventually, according to Redfin. Wall Street losses, however, will most likely negatively impact the high-end real estate market more than any other as, again, investors hold onto the cash they have left.
One market expecting a Brexit-led boon, however, is the mortgage refinancing industry, which is poised for an expected glut of applications due to low interest rates. Overall, Redfin said, real estate market fundamentals haven't changed in the U.S. because of Brexit, so Americans shouldn't let the U.K.'s decision affect their homebuying plans.
Brexit comes at a time when much of the U.S. real estate market is characterized by record high home prices and low inventory. Any dip in prices, or at least a slowdown in price growth, would be a relief to those homebuyers finding it difficult to come up with a down payment, particularly first-timers who are facing limited starter-home inventory in addition to steep price tags.
