INTERNATIONAL REAL ESTATE INVESTORS ARE PLAYING MUSICAL CHAIRS IN THE US! (aka CURRENCY IS KING!)
My brother came into town from Boca Raton, Florida to celebrate my graduation from Southern Utah University. He and I have invested in millions of dollars of real estate over the last 20 years together. Real estate and finance are subjects we both understand quite well and enjoy discussing. One of the subjects that came up was the transition of international real estate investors in the Miami-Dade County market. From 2011 through 2013, investors from Brazil,Venezuela, Russia, and Argentina have been the primary international buyers of real estate in the south Florida market. This was due to the fact that these investors capital was extremely strong against the U.S. Dollar; obviously this gave investors from those countries stronger purchasing power.
According to a first quarter residential market report released in January by the Miami Downtown Development Authority (DDA), "Due to the recent advance of the U.S. dollar versus most South American and European currencies, the advantageous buying power of foreign investors has been diminished significantly since 2011,” the report states. “While the Euro has not diminished as much as the South American currencies, its slide versus the U.S. Dollar has only recently started and is expected to continue to decrease over the next six to 12 months.”
As my conversation with my brother continued, the conversation moved to where the money was coming from now? One only had to look towards China, Mexico, and Canada to find the answers. These three currencies have made strong gains from the end of 2015 through 2016 against the US Dollar. The US Dollar has seen a drop in value due to international disbelief in the Federal Reserve as they continue to toy with another possible rate hike. My brother was explaining that his local market has seen more buyers from Canada, Mexico, and China starting to replace those buyers from Brazil, Russia, Argentina, and Venezuela.
Whether it comes to investing, traveling, or consumer purchasing, the currency exchange will always play relevance in the supply and demand curve. Perhaps, my brother and I will start looking at real estate outside our backyard and see what countries such as Russia, Brazil, and Argentina can offer us with our strong US Dollar and their weak currency!