Does a strong dollar mean a strong real estate market?



When the dollar value goes up it has a significant impact on major markets and especially the real estate market. A strong dollar means that the prices in various countries go up, and if it is weak, then the prices go down. 

It is very hard to say whether a strong dollar is good for the real estate market. For some investors, it is an additional opportunity – in some countries in Europe it is deemed to be bad for finances. In this article, we will talk about that subject.

For instance, in 2015, strengthening the dollar against most world currencies reduced the availability of real estate in Miami for foreigners. A stronger dollar reduces the availability of US real estate to foreign buyers. Over the past few years, a large number of relatively inexpensive options could be found in the US real estate market, but now with the increase in prices and the dollar appreciated against most currencies, many foreigners can no longer afford American real estate. This may adversely affect real estate markets in those regions of the United States that are significantly dependent on foreign buyers. One such place was Miami.

If we take a look at the recent USD surge reported by the Axiory analysts, which occurred after the newly-appeared coronavirus, it affected the real estate market notably. For some experts, it was a further indicator of a strong real estate market, while some find deficiencies.

To further examine what the strong USD really does we should provide an example. For instance, for Russians receiving a salary in rubles, real estate in Miami turned out to be twice as expensive as it was in the past. And for residents of the euro area, real estate price increases in New York over the same time amounted to 24%. Canadians will have to pay 20% more for real estate in Phoenix.

At the same time, many market experts note that many buyers from China and South America continue to purchase property in Miami and other regions of the United States. Moreover, the strengthening of the dollar even increased their interest, since, for such buyers, real estate in Miami is primarily an investment.

At the same time, Canadians, traditionally active in the US real estate market, show significantly less interest. In 2014, they acquired 19% of all real estate in the United States purchased by foreigners. At the same time, this figure was 23% in 2011. Moreover, many Canadians who bought real estate several years ago are now thinking about selling it, thus maximizing their profits, because the Canadian dollar against the US dollar has recently declined by 20%.

At the same time, buyers from South America are increasingly active in Miami. Given the growth of the dollar, they seek to invest in real estate in order to make a profit in the future, both due to an increase in its price and in connection with the continued strengthening of the dollar. Thus, for many foreigners, the growth of the dollar is an indicator of the stability of the American economy and the prospect of investing in US real estate.