November 4, 2024 The Best Source of News, Culture, Lifestyle for Culver City, Mar Vista, Del Rey, Palms and West Los Angeles

Los Angeles Real Estate Prices Could Get Push Higher As United Kingdom Exits European Union

CCN-BESSH62816BSince the United Kingdom’s historic vote on June 23 in favor of exiting the European Union (referred to as “Brexit”), there has been much speculation about its potential impact on the global community including the effect on stock markets, gold and bonds as well as on real estate.
The consensus among financial and real estate experts is that the Brexit vote could cause U.S. housing prices to rise. This impact on U.S. real estate is anticipated due to the increasing interconnectivity of the global economy.
When the vote for the United Kingdom to exit the EU was announced, global financial markets went into freefall. The expected ongoing turmoil in connection with the U.K.’s withdrawal from the EU and the domino effect it may have on other EU members is predicted to put downward pressure on U.S. mortgage rates.
Lower mortgage rates generally translate into higher prices because low interest rates make it possible for buyers to afford to purchase higher priced properties without having to earn a higher income. At lower rates, the loan amount and monthly mortgage payments become more affordable.
Moreover, a period of prolonged uncertainty is expected in London as it sorts out its political and economic status in the global world economy. During this uncertain time, it is expected to lose its status as a premier safe haven for global money.
International buyers have been increasing investment in the U.S. over the last several years. As their familiarity with the U.S. property market has grown, these investors will likely view the U.S. as a sound alternative to London real estate.
The British National Assn of Estate agents and the Assn of Residential Letting Agents forecast that the win for Brexit will result in a huge reduction in U.K immigration levels. This will mean less demand for U.K. housing and office space and therefore depressed sales prices and lower rental prices.
This prediction of a drop in U.K. property values and rents comes after a warning by Christine Legarde, the managing director of the International Monetary fund, that the U.K.’s decision to leave the EU would result in “sharp falls” in house values and the stock market. Even before the vote, construction of commercial projects in the U.K. had stalled for fear of making long term commitments in the face of so much financial uncertainty.
London office values are speculated to drop 20 percent in the next 3 years as businesses relocate with a projected 15 percent drop in retail space. According to London-based Fidelity International, which manages $1 billion of real estate assets, including $664 million in the U.K., it could take several years to understand the impact of the Brexit vote.
London represents the largest market for Euro-denominated trading. Banks with trading offices in London are now concerned that they will need to relocate, including Deutsche Bank AG and HSBC Holdings PCB. JPMorgan, the largest U.S. Bank, said it may move up to one quarter of its 16,000 British workers.
There is another reason that the U.S. is becoming more attractive to foreigners for investment here. The U.S. Government made investment in the United States easier with the December 2015 rule change easing the tax burden on certain foreign investments. For example, a non-U.S. investor can own up to 10% of a REIT before incurring Federal taxes. This is up from the prior cap of 5 percent before becoming subject to Federal taxation.
Prime U.S real estate markets including Los Angeles with its desirable luxury residential neighborhoods that appeal to the very wealthy are expected to be a big beneficiary of the loss of London’s appeal as a safe haven for property investment.
Lucian Cook, head of residential real estate for global consultancy firm Savills, acknowledged that the uncertainty prior to the Brexit vote impacted buyers causing them to hold back. Continuing uncertainty is expected to have a similar impact on U.K. real estate. The Luxury real estate sector there is expected to be more affected.
Foreign buyers invested about $80 billion in U.S. real estate last year according to reports by the National Assn of Realtors. Most were from China (16 percent), with Canada following closely (14 percent), then Mexico (9 percent), India (8 percent) and Britain (4 percent). Most are investing in luxury real estate valued at about $15 million and more. Most economists are saying foreign buyers will probably steer clear of investing in London heading for markets like San Francisco and L.A. instead. Look for more investment in major U.S. Coastal cities.
Anyone considering buying or selling a home is advised to keep an eye on the news out of Europe and its possible effect on U.S growth.
According to a report by CNBC on May 18, a poll conducted by Zillow of real estate experts showed which Presidential candidate would be best for the health of the real estate market here in the United States. The results showed Republican nominee Donald Trump and Democratic nominee Bernie Sanders would set back the housing market recovery and prospects for economic growth.
The panel of experts would rather have a candidate elected with more centrist views, naming either Democratic nominee Hillary Clinton or Republican Governor John Kasich, who suspended his campaign after the survey was conducted, as best for the U.S. real estate market.
For a free courtesy consultation, contact Bess Hochman, a top Westside Real Estate Broker for over 20 years. Bess is also distinguished by holding a law degree. This article expresses the opinion of the author. You are advised to consult attorneys & others experts specializing in the issues referenced in this article. Contact Bess: 310.291.4111. E-mail: Bess.CenturyCityNews@yahoo.com
“Bess is a master negotiator!” says Michael Donaldson, attorney & author of Negotiating For Dummies.

Related Posts

5 Strategies for Entrepreneurs to Succeed in the Gaming Industry

October 15, 2024

October 15, 2024

Gaming is one of the most competitive industries in the world. For entrepreneurs, this industry offers many opportunities but also...

8 Places to Spend Crypto in LA

September 2, 2024

September 2, 2024

Los Angeles is a vibrant city known for its innovative spirit, and as cryptocurrencies gain traction, many local businesses are...

The Best Sites Where You Can Buy TikTok Followers

September 2, 2024

September 2, 2024

TikTok has been popular as a social media platform with its creativity and popularity. Since it’s the case, many of...

Bitcoin Mining in Los Angeles and Its Economic Impact

August 12, 2024

August 12, 2024

Once a quirky computer pastime for the geek squad, bitcoin mining has become a significant economic force in places like...

How to Stay Safe While Enjoying Digital Entertainment in West LA

August 5, 2024

August 5, 2024

Recent developments have shown that so much of people’s daily lives are centered on the internet. A 2021 survey conducted...

Why Choose Local Florists for Your Flower Delivery?

May 12, 2024

May 12, 2024

Finding local florists has become easier than ever with the advent of digital marketplaces. Opting for Nashville flower delivery near...

8 Essential Things to Do After a Car Accident in Las Vegas

April 16, 2024

April 16, 2024

A car crash can be extremely traumatic for the people involved in it. Even if there is no major injury...

8 Essential Things to Do After a CarAccident in Las Vegas

April 8, 2024

April 8, 2024

A car crash can be extremely traumatic for the people involved in it. Even if there is no major injury...

Foreign Currency in International Business Expansion

January 2, 2024

January 2, 2024

Business has transformed into a whole different dimension. The interconnectedness across countries is increasing the feasibility of business expansions. It...

How to Select Quality Solar Panels and Installation in California

January 2, 2024

January 2, 2024

As solar energy becomes more affordable and popular, many homeowners in California are considering installing solar panels. However, not all...

Celebrating Christmas in Las Vegas: A Winter Wonderland of Fun and Festivity

November 15, 2023

November 15, 2023

As the festive season approaches, Las Vegas transforms into a glittering winter wonderland, offering a unique and magical Christmas experience....

Navigating Oxnard’s Public Transportation System: A Driver’s Guide

November 2, 2023

November 2, 2023

Whether you live in Oxnard or want to visit, it’s useful to know how to get around this coastal city....

15 Tips For Keeping Burglars Out Of Your Business

October 16, 2023

October 16, 2023

In the ever-evolving realm of business security, the persistent threat of burglary perpetually looms overhead like a dark cloud. The...

US Gambling Laws

July 12, 2023

July 12, 2023

Whilst casino gaming is a significant part of the American culture, US gambling laws are ever-changing. Prior to the Unlawful...

Reasonable Renting in The City of Angels

June 2, 2023

June 2, 2023

What would it be like to wake up in a bustling metropolis filled with endless possibilities, set against rows of...