Could you afford a house in Europe?
The cost of keeping a roof over your head and food on the table keeps rising, and many Americans are starting to feel the pinch. In June, median rents crossed the $2,000 mark for the first time, according to Redfin. Meanwhile, house prices have increased by 30% between 2020 and 2022.
It is therefore not surprising that some Americans are considering expatriate to lower their costs. Europe is a popular option, especially since the dollar is strong against the euro at the moment. Real estate firms say there has been a spike in interest from US buyers, particularly from countries like Portugal, Italy and France.
Paulo Fernandes, owner-manager of Paris Ouest Sotheby’s International Realty, says the number of visits to the company’s website from abroad has increased by 40% since September. “Foreign buyers remain interested in Paris because a classic Parisian stone property is a safe investment, and prices here are constantly rising,” he said.
Could you afford a house in Europe?
It’s almost impossible to make direct price comparisons between the US and Europe because there are so many different factors involved. Just like a house in New York would cost significantly more than one in Mississippi, buying in major cities in Switzerland or Germany would be significantly more expensive than in parts of Italy or Spain.
The median property in the United States costs $428,700, although prices vary wildly from city to city and state to state. According The Ascension Researchaverage real estate costs in Hawaii exceed $1 million, while West Virginia costs less than $150,000.
Most European countries measure property prices in euros per square meter rather than in total costs, which makes comparison between comparables difficult. A study showed that the average cost of real estate in Portugal – a popular destination for Americans right now – was around $365,000 in the third quarter of last year. Properties in some parts of the country cost less than $125,000.
Bloomberg spoke to a woman who had moved from Atlanta to Italy. Rising prices meant she couldn’t get a foot on the US real estate ladder, even with $300,000 in hand. In Sicily, she bought a house and the adjoining storefront for 60,000 euros. Plus, if you’re willing to live in a remote village and undertake some serious renovations, there are parts of Italy where local authorities sell repairers for just 1 euro. It’s not as sweet a deal as it sounds, as you have to commit to paying for renovation costs and legal fees.
Considerations when moving abroad
There are all sorts of attractions to living in another country. Not only will you be able to reduce your costs or buy property in a more affordable market, but you will also have the joy of discovering a new culture. Remote work makes nomadic lifestyles more accessible, but it’s not for everyone.
Here are some potential headaches for anyone considering moving across the pond:
- Visas and other papers: I have lived in several different countries and visas are always a hot topic among expats. Make sure you fully understand the rules. Also do some research to see if there might be any upcoming changes.
- Taxes: Don’t forget the tax rules. You will still have to pay taxes in the United States. And although there are systems to avoid double taxation, you may also have to pay taxes locally. Make sure you understand what you will have to pay, including any local taxes or property taxes.
- Language: Learning a new language can be difficult, as can living in a country where you don’t speak jargon. If you are thinking of moving to Spain, France or Portugal, take lessons before you leave.
- Bank and credit card charges: A credit card that does not charge foreign transaction fees is essential. Otherwise, you could pay around 3% on each foreign transaction. There are also other bank charges to consider. For example, if you plan to buy a house, you will pay to transfer this money abroad.
- Health and insurance: You may need to pay for international health insurance. Look for other types of Insurance Additionally, you may need shipping insurance, homeowners insurance, or travel insurance to protect against theft or crime.
- Unexpected emergencies: If you are moving overseas, you may need a larger emergency fund that you are used to. When calculating how much you need to set aside, keep in mind that an emergency may involve returning to the United States as well as time to look for a new job.
- Mortgages: Depending on your situation, it may be difficult or impossible to obtain a mortgage to buy a property abroad. Be prepared to pay higher interest rates on your mortgage and possibly a larger down payment.
At the end of the line
Americans increasingly value the benefits of moving to another country, particularly if it helps them buy a home or lower the cost of living. Rather than wondering if you could afford a home in Europe, ask yourself if you would be able to build a life in another country.
Would you be able to manage long-distance relationships with friends and family? If you work remotely, how will you deal with jet lag? And do you have funds saved to cover unexpected expenses? The more you can prepare in advance, the more rewarding the experience will be.
The Best Mortgage Lender in Ascent in 2022
Mortgage rates are at their highest level in years and should continue to rise. It’s more important than ever to check your rates with multiple lenders to get the best possible rate while minimizing fees. Even a small difference in your rate could reduce your monthly payment by hundreds.
This is where Best Mortgage Between.
You can get pre-approved in as little as 3 minutes, without a credit check, and lock in your rate at any time. Another plus? They do not charge origination or lender fees (which can reach 2% of the loan amount for some lenders).
We are firm believers in the Golden Rule, which is why editorial opinions are our own and have not been previously reviewed, approved or endorsed by the advertisers included. The Ascent does not cover all offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Emma Newbery has no position in the stocks mentioned. The Motley Fool fills positions and recommends Visa. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.