Long Beach Real Estate Attractive to European Investors

Euopean investors have a double bonus with an investment in Long Beach real estate as the dollar sinks to an all-time low against the Euro.  I'm going to explain how a weakened US Dollar can benefit a foreign investor should they buy real estate in Long Beach.

Five years ago, $100,000 was equal to 100,000 Euro (the currency in Europe).  Today, that $100,000 is only worth 72,000 Euros.  A foreign investor can withdraw 72,000 Euros and convert it to $100,000 to use for a down payment on a Downtown Long Beach condo.  That  property may have cost as much as $360,000 two years ago but is selling today for $300,000.

Prices fluctuate in cycles.  Let's not forget that there will be close to 50 million Californians by 2020, 12 million more than our current population.  There is a significant, 12 year demographic trend that points to the probablity of higher prices in Long Beach.  Traditionally, real estate has returned 6% annually these past 25 years.  Let's assume it returns just 4% these next five years.  This means that that $300,000 Downtown Long Beach condo will be worth about $360,000.

Again, prices fluctuate in cycles.  Let's further assume that the US dollar gains half of its former strength against the Euro.  The $160,000 proceeds realized from the sale of the condo  (price less the $200,000 loan) would convert back to Euros at .87 Euros to the Dollar, not the current .72 Euros to the Dollar.  This means that the $160,000 would convert to 136,000 Euros.

An American investor would invest $100,000 and get $160,000; a 60% return over five years.  A European investor, however, would invest 72,000 Euros and receive 136,000 Euros for an 88% return over five years.  The relatively low prices in Long Beach real estate combined with the absolute low exchange rate against the US Dollar provides an extraordinary opportunity for European investors.

Sell those shares of Allied Irish Banks and consider a Downtown Long Beach condo as an investment.

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Posted on July 10, 2007 18:41:46 by Brian.Brady

Comment from: Irina Netchaev [Visitor] · http://www.Irina4RealEstate.com

Brian, great article and a wonderful explanation on return on investment for our European friends.  What an opportunity to invest in the American dream!

Laurie, what a great guest author!

Thanks!!!

Permalink July 11, 2007 10:14:50

Comment from: David Podgursky [Visitor] · http://themortgagegotoguy.blogspot.com

Nice post!

good information about the intricacies of rates

Permalink July 12, 2007 14:23:55

Comment from: Henry [Visitor] · http://www.movoto.com

I have just performed an analyses about two Southern California beach town real estate conditions: Carlsbad and Huntington Beach.  While they both present some of the most expensive homes for sale in the US, Carlsbad comes out to be more "affordable":

 

- Henry

 

Permalink July 14, 2007 05:09:48

Comment from: Laurie Manny [Visitor] · http://www.lauriemanny.com/

Henry,

I am interested in your findings.  Can you elaborate a little more on what tipped the scale? 

Permalink July 19, 2007 15:04:36

Comment from: Laurie Manny [Visitor] · http://www.lauriemanny.com/

Irina,

Brian has become a great 'partner'.  I am blessed to have him contributing here.  Thank you.

Permalink July 19, 2007 15:05:47

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