It could be time to buy your vacation home in Italy. A strong US dollar is pushing Americans to snap up real estate in Europe.
- The value of the Euro has plummeted, and achieved parity with the US dollar.
- That means American have more spending power in Europe.
Although it may feel like inflation is stretching your spending power these days, the US dollar is relatively hot right now on a global scale — and many Americans are taking those dollars to the European real estate market.
That's according to The Wall Street Journal's J.S. Marcus, who reported that a growing number of Americans are buying second homes in expensive European cities, taking advantage of the US dollar's current strength abroad and its accompanying high exchange rate.
That's as the rise in gas prices is hurting the value of the euro, Insider's Carla Mozée reported this month. It's hitting multi-year lows as the US dollar hits multi-year highs. It's unlikely to recover until Europe can rein in its natural gas crisis, according to Societe Generale, a French investment firm.
Because of that, the US dollar and the euro hit parity for the first time in 20 years in July, meaning the two currencies have the same value, which is reflected when trying to exchange one for the other. The dollar even surpassed the euro in value last month.
While the US dollar is on the rise and the euro is languishing, Americans with cash to spare are investing it overseas. As far as real estate goes, London, Paris, Provence, Tuscany, northern Italy's Lake Como and Lisbon are emerging as some of the most popular European markets for Americans, Kate Everett-Allen, head of international residential research at London's Knight Frank, told The Journal.
The shift in interest abroad comes on the heels of a pandemic real estate frenzy in the US, largely driven by wealthy millennials pushing out their less wealthy peers. The US housing market is currently in a recession, presenting a small window for buyers to secure deals that have been rare for the past two years. Between the recession and a European market diverting the interests of the wealthy, the US housing market may finally be seeing some avenues for relief.
'The dollar's strength has definitely affected my search'
Many of the Americans securing homes in Europe are snagging great deals on their new properties.
Laetitia Laurent, a South Florida interior designer, bought an apartment in Paris this summer for 758,000 euros, or $758,606 in the Golden Triangle, a notoriously pricey area in the center of the city. Laurent estimates that she saved around $80,000 between the time she first saw the apartment earlier this year and when she closed in July, she told The Journal.
And prices are barely rising in some of the most popular European spots that Everett-Allen described, growing less than 5% between the first quarter of 2021 and the first quarter of 2022 in London and Paris, according to the most recent Knight Frank Global Residential Index. In comparison, American cities dominate the index, taking up nine of the top 20 spots.
Robin Adkins, a Nashville-area business owner shopping for a home in Italy, told The Journal that she was able to increase her budget due to the profitable exchange rate.
The dollar's strength has "definitely affected my search," she said.