For Americans who have long dreamed of owning a European getaway, the euro’s tumble is a game changer. From its low point last year to today, the dollar has strengthened by 26% against the euro. The last time the dollar traded this high against the euro was in 2003.
“The consensus is that the euro-dollar will be at 1.10 by the end of this year, but a number believe the dollar could be even stronger,” said Daragh Maher, FX strategist at HSBC in London. As of publication, one euro traded for $1.10.
Agents in Paris, Tuscany and Barcelona said that since January they’ve been flooded with calls and emails from Americans. Sotheby’s International Realty in France and Monaco currently has 30% to 35% more American clients than in 2012 and 2013, said chief executive Alexander Kraft. He added that between price declines and the slide of the euro, Americans could now pay 40% less in Paris than they would have in 2012.
Here’s a look at how the exchange rate is affecting Americans in three popular second-home locations.
BARCELONA
Lane Auten has an eye for a bargain. From 2010 to 2012, he managed a real-estate portfolio in the San Francisco Bay Area. Three years ago, believing that “the yield is no longer attractive” in U.S. single-family houses, he moved to Barcelona with his Spanish wife Nieves Prieto, a documentary filmmaker. He created a new investment group that buys, renovates and sells luxury apartments in the city.
Seven months ago, he and three other investors found a historic building in the city’s Gothic neighborhood. His personal stake: €1.2 million, or roughly $1.62 million at the exchange rate last summer; when he closed in February, he paid around $1.35 million.
“It was a good deal when we first came across it, and it’s been getting better ever since,” said Mr. Auten, 47.
The soft euro has also been a boon for Mr. Auten’s personal home. Two years ago, he and Ms. Prieto, 42, rented a two-bedroom apartment in the city’s trendy Gracia neighborhood for €2,000 a month, or roughly $2,650 at the exchange rate at the time. Today, they’re paying about $2,200 a month. With costs down, they decided to get some additional space for guests and in January leased a studio apartment with a large terrace upstairs for €1,000 a month, or $1,100.
Alex Vaughan, founding partner of Lucas Fox, a luxury realty in Spain and Portugal, said Americans have traditionally made up just 1% to 2% of his client base. Last year, that figure grew to 5% and continues to increase.
Last fall, Engel & Völkers, a Hamburg-based international luxury realty, opened an office in Madrid that it plans to staff with more than 200 multilingual sales people; the company opened an equally large office in Barcelona two years ago. The goal is to make house-hunting more similar to the process in the U.S., said managing partner Philipp Niemann.
“We are prepared for dollar buyers,” Mr. Niemann added.
yers dreaming of a Tuscan villa or a Parisian pied-à-terre are enjoying discounts created by the strong dollar
Amid a slide in the euro, dollar-holding Americans are at last seeing bargains when they hunt for property in prime European locations.
Lisa Suydam went into contract on a Paris pied-à-terre in November, but the deal still hasn’t closed, because the seller needs more time. Ms. Suydam couldn’t be happier.
“Every point that the euro drops, I’m saving money. Not closing has saved me lots,” said the 62-year-old retired international flight attendant.
Last fall, when she agreed to pay €690,000 for a 366-square-foot one bedroom in the 7th arrondissement, the cost in dollars was roughly $870,000. Today, it is about $760,000, though Ms. Suydam already put down a 10% deposit and exchanged some euros at a slightly higher rate. She plans to close later this month.
For Americans who have long dreamed of owning a European getaway, the euro’s tumble is a game changer. From its low point last year to today, the dollar has strengthened by 26% against the euro. The last time the dollar traded this high against the euro was in 2003.
“The consensus is that the euro-dollar will be at 1.10 by the end of this year, but a number believe the dollar could be even stronger,” said Daragh Maher, FX strategist at HSBC in London. As of publication, one euro traded for $1.10.
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Agents in Paris, Tuscany and Barcelona said that since January they’ve been flooded with calls and emails from Americans. Sotheby’s International Realty in France and Monaco currently has 30% to 35% more American clients than in 2012 and 2013, said chief executive Alexander Kraft. He added that between price declines and the slide of the euro, Americans could now pay 40% less in Paris than they would have in 2012.
BARCELONA
Lane Auten has an eye for a bargain. From 2010 to 2012, he managed a real-estate portfolio in the San Francisco Bay Area. Three years ago, believing that “the yield is no longer attractive” in U.S. single-family houses, he moved to Barcelona with his Spanish wife Nieves Prieto, a documentary filmmaker. He created a new investment group that buys, renovates and sells luxury apartments in the city.
Seven months ago, he and three other investors found a historic building in the city’s Gothic neighborhood. His personal stake: €1.2 million, or roughly $1.62 million at the exchange rate last summer; when he closed in February, he paid around $1.35 million.
“It was a good deal when we first came across it, and it’s been getting better ever since,” said Mr. Auten, 47.
The soft euro has also been a boon for Mr. Auten’s personal home. Two years ago, he and Ms. Prieto, 42, rented a two-bedroom apartment in the city’s trendy Gracia neighborhood for €2,000 a month, or roughly $2,650 at the exchange rate at the time. Today, they’re paying about $2,200 a month. With costs down, they decided to get some additional space for guests and in January leased a studio apartment with a large terrace upstairs for €1,000 a month, or $1,100.
Alex Vaughan, founding partner of Lucas Fox, a luxury realty in Spain and Portugal, said Americans have traditionally made up just 1% to 2% of his client base. Last year, that figure grew to 5% and continues to increase.
Last fall, Engel & Völkers, a Hamburg-based international luxury realty, opened an office in Madrid that it plans to staff with more than 200 multilingual sales people; the company opened an equally large office in Barcelona two years ago. The goal is to make house-hunting more similar to the process in the U.S., said managing partner Philipp Niemann.
“We are prepared for dollar buyers,” Mr. Niemann added.
PARIS
Amanda and Michael Drinnan, who live in the San Francisco Bay Area, have long had a pied-à-terre in Paris, but last fall, they decided to hunt for a larger apartment in a more central area. They found a high-ceilinged one bedroom in the trendy Marais neighborhood for €785,000—about $980,000 at the time—and went into contract in November. They’re planning on closing at the beginning of April; at today’s exchange rate, they’ll pay about $864,000.
That math explains why “our inbox is exploding with prospective requests,” said Miranda Bothe, founder of Paris Property Group, a real-estate agency that serves foreign house-hunters, including the Drinnans and Ms. Suydam.