Here in the U.S., the Dow Jones industrial average fell 610 points, or 3.4% following news of the Brexit. At the time of this writing, it continues to fall, and the psychological effect throughout other economic sectors is beginning to show.
All of this market movement is bad news for confidence in the economy, which can put off both homebuyers and sellers. Especially for those with jobs in the financial industry, buying or refinancing a house today might not be the wisest decision, as future layoffs or job relocations are possible aftershocks of the Brexit.
Buyers may be temporarily gun-shy as they see the hit to the value of their stock investments, but the dust will quickly settle…….
Beyond the initial financial panic caused by the Brexit, there’s little cause for worry for homebuyers and sellers in California.
It will take two years for the UK to fully leave the EU, which means markets and businesses will have a chance to react ahead of the actual trade changes. In that time, the Fed will undoubtedly raise interest rates, which it would have done with or without the Brexit.
Over the short-term, you may see some volatility in the housing market, which won’t last more than a few weeks. During times of economic uncertainty, it’s often best to wait for the froth to subside. Therefore, you may see more hesitant homebuyers in the coming weeks. Still, the recent drop in interest rates will likely counteract this hesitation as homebuyers seek to take advantage of low rates (particularly after they observe the sky hasn’t fallen).
Over the long-term, California’s housing market won’t look any different than it would have otherwise.
Don’t let the Brexit hype fool you: the economy of the U.S. and California are still in good shape, and the housing market will remain strong. Instead, turn your sights closer to home. Lack of construction, restrictive zoning and high home prices are all factors more likely to cause hiccups in the housing recovery.