Buying a home in Europe just became more a bit less expensive for Americans.
That’s because for the first time in 20 years, the US dollar has reached parity with the euro, meaning the two currencies now share the same value.
It stems from volatility in Europe’s economy as several countries grapple with financial setbacks spurred on by the Ukrainian war. As fear of a possible recession grows in Europe, the strength of the US dollar has become attractive for many investors.
As the US dollar rises, more wealthy Americans are investing their money overseas — especially in European real estate.
With the US dollar climbing and the euro languishing, it’s given US homebuyers a 16% discount in Eurozone countries. The Wall Street Journal reported that the US dollar’s high exchange rate has enticed many Americans to purchase second homes in European cities as home prices are barely budging.
According to global real estate company Knight Frank, Paris, St. Tropez, Tuscany, Venice, Barcelona, Mallorca, and Sardinia, have become the most popular European real estate markets for American home buyers. Since the beginning of the pandemic, these, as well as other global destinations like Mexico City have seen a surge in foreign demand — and an invasion of remote workers that don’t always benefit local economics.
In Paris, housing remains relatively affordable. According to the most recent Knight Frank Global Residential Index, prices in the city rose less than 4% between the first quarter of 2021 and the first quarter of 2022. As Americans with a budget consider their real estate options, that’s a good deal — especially considering home prices are still soaring in the US. Americans moving to the “city of love” will enjoy the city’s world class cuisine and its rich history of art and fashion.
Renowned for its luxury, St. Tropez is a hotspot for the world’s rich and famous. And as such, its housing market is one of the most expensive in France. As foreign buyers flock to the city, home prices have climbed 15% since 2015, according to data from Paris Property group. Home to some of France’s most expensive hotels, boutiques, and restaurants, it’s no wonder the city has the reputation of being a truly glamorous destination.
Italy is also proving to be a valuable site for American investment — according to the Knight Frank Index, five Italian cities saw a drop in average home prices between this year and last year, making up more than half of the cities that saw a drop on the index. Additionally, Rome and Milan were also far down the index in terms of price hikes, seeing less than 5% each.
In the Tuscany region, the real estate market is red-hot. Following a decade of lackluster growth, home prices in the region have been climbing since 2018, according to Knight Frank. But even with notable price growth, the housing market is still relatively affordable. Buyers interested in calling Tuscany home, are entering a world of beauty as the region is well known for its sprawling landscapes and enchanting forests.
In addition to Sardinia and Tuscany, Knight Frank’s also noted that prime prices are gaining traction in Venice, even if home buying in the city hasn’t reached its pre-pandemic heights. The researchers also noted that real estate in Venice is more receptive to negotiation than in other parts of the country. Interest in moving to Venice among Americans increased 6% in 2021, Knight Frank said.
Real estate in Spain is also proving popular among Americans, with Barcelona and Mallorca being the standouts, according to Knight Frank. Knight Frank doesn’t rank Mallorca on its index, but prices in Barcelona held steady between this year and last year, only increasing by 4.3%.
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