Surging Dollar Creates Opportunity For Retiring Overseas
If you’re shopping the world map, trying to choose where to live or retire or where to invest in a second home overseas, you don’t want to make your decision based entirely on currency exchange rates. However, right now, you do want to pay attention to them. The U.S. dollar is so strong against currencies in some of the world’s most appealing retirement and vacation home destinations that real estate in these places is trading at a discount too great to ignore.
The dollar has been moving up against some currencies since 2010; Brazil is a notable example here. The dollar began rising notably against other currencies in mid-2014, and it continues moving up today. The most dramatic gains have been over the past year.
Here’s a summary of U.S. dollar activity versus currencies in key overseas retirement and property havens:
| The euro | Colombia | Chile | Mexico | Brazil | Canada | |
| US$ at its five-year low | €0.68 | COP 1,739 | CLP 459 | MXN 11.58 | R$1.55 | C$0.95 |
| US$ at its 2014 low | €0.72 | COP 1,852 | CLP 531 | MXN 12.86 | R$2.21 | C$1.06 |
| US$ today | €0.92 | COP 2,729 | CLP 657 | MXN 16.04 | R$3.19 | C$1.30 |
| Discount to 2014 | 22% | 32% | 19% | 20% | 31% | 18% |
| Discount to 2010 | 26% | 36% | 30% | 28% | 51% | 27% |
These exchange rate movements are resulting in some surprising market twists. Ecuador, for example, has long been a benchmark for real estate values. It has offered top value for money for the past decade and a half. In Cuenca, Ecuador’s most popular city for expat retirees, real estate is selling today for around US$1,200 per square meter. That’s only US$112 per square foot, a bargain for city life anywhere.
However, thanks to the current exchange rate between the Colombian peso and the U.S. dollar, the average cost of property in Medellín, Colombia, another top city choice for expat retirees, with its cosmopolitan lifestyle, pleasant year-round climate, and luxury housing options, is down to US$1,000 per square meter in that city’s most expensive neighborhood, El Poblado. That’s just US$93 per square foot, cheaper than in Cuenca.
Brazil is an even better example. Real estate in Fortaleza’s upscale Aldeota neighborhood is currently trading for US$1,164 per square meter (US$108 per square foot) on average. The average cost in this part of this appealing coastal city was US$2,400 per square meter in 2010. Thanks to the exchange rate, prices have fallen by half for U.S. dollar holders.
Prices are down 30% in Chile in the past five years thanks to the dollar’s strength versus the Chilean peso. And the dollar’s surge against the euro makes property prices in any country where real estate trades in euros 26% more affordable for U.S. dollar holders today than in 2010. Worth highlighting in euro-land is Portugal, Live and Invest Overseas’ 2015 pick for the world’s top retirement haven. Recessed markets coupled with the dollar’s strength means you could own a seaside home of your own in Portugal’s sunny Algarve region for as little as US$150,000.
The dollar is up nicely against the currencies of its two nearest neighbors, as well. The U.S. dollar is 27% stronger versus the Canadian dollar than it was in 2010 and 28% stronger versus the Mexican peso than five years ago, making both these markets more interesting for would-be American retirees. Canada isn’t generally thought of as a top retirement choice, but Ontario, for example, offers appealing lifestyle options, especially for part-year living. Escape south during Canadian winter, maybe to Mexico, a well-established snowbird option. Today’s surging Greenback makes that kind of dual-retirement haven strategy more reasonable and possible than ever.
I don’t usually recommend following exchange rates as a method for choosing where to live or retire overseas or when to time the purchase of property in another country. However, currency discounts like the ones U.S. dollar holders are enjoying right now in key markets are too big and far-reaching to ignore. Before taking the plunge into a U.S. dollar-based country (such as Ecuador or Panama), make sure one of the currency-discounted countries won’t fit the bill for you. It could save you a lot of money and enable you to buy a level of luxury, a standard of living, and amenities that might otherwise be unaffordable.
Lee Harrison
Editor, Overseas Property Alert
Continue Reading: Resources For The Purchase Of Property In Portugal
