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It's summer, the dollar is incredibly strong, and your Instagram feed is a constant reminder everyone's taking advantage of the situation with vacations abroad. But some people are making the trip a little more permanent.
With a brutal housing market at home, there's an influx of Americans turning toward the greener pastures of Europe's relatively cheap housing.
'Give Me Your Frustrated, Your Anxious, Your Prospective Homeowners'
The arithmetic is simple. In June, the median sales price of an existing US home hit $416,000, the National Association of Realtors announced on Wednesday. That's an increase of over 13% year-over-year, and a record high since at least 1999. Unsurprisingly, home sales fell 5.4% in June, dropping for the fifth consecutive month, and would extend to an annual rate of 5.12 million, below pre-pandemic levels in 2019. Mortgage demand last week was 21% lower than a year ago, and dropped to the lowest level of the century, according to the Mortgage Bankers Association. Lots of prospective buyers are effectively locked out of the market.
Meanwhile, competing inflationary forces have pushed the euro to dollar parity for the first time in 20 years. That makes buying an order of boeuf bourguignon from a Paris bistro or a bowl of pasta alla norma in Sicily cheaper for American tourists. The same math applies, of course, to homes:
- US demand to move to France and Italy is at the highest point in at least three years, Knight Frank real estate specialist Jack Harris told Bloomberg. Meanwhile, Sotheby's International Realty says American requests to move to Greece increased 40% year-over-year from April to June, while Americans contributed 12% to its Italian revenue in Q1, up from 5% last year.
- "The rising cost of living has made it more expensive to live in any major U.S. city than in European cities," said Michael Witkowski, vice president of U.S.-based ex-pat consultancy ECA International, told Bloomberg. "Expensive home prices as well as a strong U.S. dollar and political tensions are all contributing factors to the growing allure of Europe."
Work From Casa: Contributing to the trend is the flexible realities of remote work. And European countries are making the moving process much easier. Spain, home to Europe's largest American population, and Portugal, which saw a 45% increase in American ex-pats in 2021, both offer a "golden visa" that grants residency rights to foreigners who place large initial investments -- like a new home, for instance. In March, Italy voted into law a Digital Nomad Visa, designed specifically to grant extended-stay access to remote workers. We may have to assign a radically new meaning to the term "staycation."