Foreign Cash Could Boost U.S. Housing

Foreign Cash Could Boost U.S. Housing

 

The weakening dollar has caused many problems for U.S. consumers, but it may also be providing the fuel for one unintended — and very welcome — benefit: a rally in the struggling housing market driven by foreign investors.

 

For an individual or developer trying to sell a home, interested buyers are just as likely to already have a place in London or Paris as they are to be first-timers new to the market.  Some mortgage brokers are already seeing a boost in inquiries about buying property from overseas.

 

As the housing market has plummeted, the dollar has also sunk to record lows compared to other currencies, such as the euro, meaning more spendable cash in the U.S. 

 

Today, a foreign buyer would need only 34,100 euros to make a $50,000 down payment on a house. At the beginning of the year, the same buyer would have needed 37,920 euros to make the same down payment.

 

Because lending guidelines have gotten so tight in recent months due to rising delinquencies and defaults, it is more difficult for U.S. borrowers to get a home loan.  First-time homebuyers are especially being squeezed right now, and that is where the foreigners can provide support.

 

For investors from countries like Ireland, the exchange rate is providing a boost in spending power.

 

The Dollar is also on sale in neighoring Canada, where the exchange rate now buys more for Canadians in the U.S. than it does in Canada.