In today’s video, I am lucky enough to be filming from Tuscany, Italy. And as part of our continuing focus on global buyers, I want to talk about foreign exchange rates and business expansion, and how those two things affect our real estate market in Sarasota.
Market Expansion is the Key to Unlocking Growth
In business, companies primarily have two ways to grow: either by finding new consumers of their product (either domestically or internationally), or by getting existing customers to increase their purchases of goods or services.
Real estate works the same way. For the real estate market to grow, it needs to attract a larger pool of buyers. In Florida, close to 1 of every 4 properties is sold to a global buyer. These buyers (like most buyers) are looking for good value. However, they have an advantage in the strength of their own currency against the dollar.
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An Illuminating Example
In 2011 the Euro was trading at 1.41 dollars per Euro. So a US property that sold for $1m would cost a Eurozone buyer about 700,000 Euro. However, there was still uncertainty in the market and many buyers were still reticent. By 2012, that same purchase cost about 815,000 Euro, an increase of about 16%.
Now, in August of 2013, that purchase costs about 750,000 Euro, a saving of about 8%. One of our German clients chose to purchase this year instead of last, which has resulted in a gain of 8%.
Eurozone buyers purchasing this year have the benefit of this gain, purchasing properties at great historical value, and investing in the US stability which has good long-term prospects, especially in the luxury market.
Stable Markets Come Out on Top
Global economies are still a tricky thing: as money moves from distressed economies to stable economies. Neither buyers nor investors like economic uncertainty. With our stabilized market comes renewed certainty in Sarasota real estate. This means as an international buyer you are putting your money in a sound and safe asset, and as a seller, you should be sure to ask how your property is being marketed to the global buyer.
Call Lee with any questions: 941.587.0740.
