Is the Dollar Going to Be Rescuing Real Estate?

In 2000, our family went to Europe, and we paid 95 cents for a euro. Today, we're looking at around 1.45 dollars to the euro. In seven years the dollar has depreciated around 55%. Now, this is good for our U.S. Debt because interest rates stay low which attracts foreign investors, and it decreases our national deficit. However, what could be the impact on our real estate? Could the Administration support a lower dollar to bail us out of our real estate crisis? By making the dollar so cheap, this could encourage foreign investors to pick up those foreclosures that many of our U.S. Buyers are afraid to touch. We're already seeing the Canadians crossing the border to pick up great deals in retail shopping. Why not real estate?

I recall back in the 1980's when the talk was all about how Japan was on a binge buying up the U. S. real estate and businesses. Back then, the fear was that the United States would be owned by Japan. As a matter of fact, we saw a lot of companies disclosing that they were American owned due to the negative sentiment. Japan had a big boom phase in their economy and real estate. They were looking for bargains with a lot of cash to spend. Then in the 1990's they sustained their worst collapse in history in their economy. However, the point here is that many Americans were convinced that Japan was going to permanently overtake the U.S. economy with all their buying. They needed a good place to put their abundance of cash flow to work. If it happened again with other foreign investors, it would put a bottom floor in the fall of real estate and could also create demand again which would bring prices back up.

Back in the good ole days, the U.S. Dollar had become the pre-eminent currency of the global economy; the U.S. real estate market was a safe house to park their money. However, why would we see foreign investors put their money into the U.S. real estate today? The answer is, the United States is having a fire sale in real estate. Between a reduction in our U.S. dollar and the depressed real estate market, the risk to reward must be tempting to foreigner investors. Let's face it; there are baby boomers over there that must want to pick up some real estate for their retirement vacation homes. What a perfect setup we could be seeing. Furthermore, it could be the only solution for real estate at this time! I'm starting to notice more Brits living in my neighborhood shopping at our nearby Target. I live in a small city near Orlando, Florida. However, my area is not a "tourist" area of Orlando.

Well, the falling dollar might help our real estate. However, it doesn't help the U.S. Consumer. It creates inflation which we will have to absorb. To learn more about the impact of a falling dollar, read "Reasons Why you Should Care if the Dollar Collapses".

If you'd like to see the impact of purchasing power of a falling dollar go to this website
There's a calculator there where you can put prices in to see what your worth is today in a falling dollar environment.