With the dollar sliding against the Euro and other currencies, the U.S. real estate debacle is presenting huge opportunities for sales to overseas buyers. As my Irish mother used to say, there is no ill wind that doesn’t blow something good to someone. This is clearly the case of the shrinking U.S. dollar. A declining dollar is a mixed blessing.

On the one hand it reduces the power of U.S. investors (and tourists) overseas. On the other hand it’s a boon to U.S. exporters, since it makes our products cheaper overseas. It also makes our real estate cheaper for buyers from abroad. That is good news in today’s real estate environment, since foreign buyers could help soak up the current housing surplus which is pushing prices downward.

For realtors in major U.S. cities (especially those with strong international links such as Washington, D.C., Miami, Las Vegas, New York, etc.), foreign nationals have typically made up a healthy segment of the buying population. These foreign buyers have been disappearing, however, for a number of reasons.

The main reason is the current trouble with mortgage financing for foreigners. Banks today, because of the sub-prime mortgage mess, have become sticklers when it comes to qualifying buyers. They are especially wary of potential foreclosures. If you are a foreign buyer, banks see you as an investor rather than a homeowner, and an investor is the most likely buyer to wind up in foreclosure.

Consequently, banks want these investors to come up with additional equity, as much as 35 percent or 40 percent down. Our firm has been lucky; we have spanned the globe to find alternative sources of mortgage financing for the international investor. Even with these sources, the equity requirement is 25 percent, 20 percent at best, if the client’s credit is superb. And we’ve had to convince these buyers to close, thanks to what they read and hear about the soft real estate economy.

The fact is that many U.S. cities are woefully overbuilt, with inventories that will take 12 to 18 months or more to reduce. Miami, where my firm is headquartered, is the poster child of overbuilding, with a two-to-three year inventory. The problem, however, is not so much the overbuilding, nor the interest rates, which have come back down. It is the national credit crunch, which has resulted in a severe lack of liquidity. For home buyers, that means limited funds for new mortgages.

This lack of liquidity is now a top priority in Washington, and there are several initiatives underway to mitigate the situation. In the meantime, we are in a real estate recession, and probably have been since 2005. Consequently, prices are dropping, and when you factor in the value of the Euro—in March it was worth 1.57 dollars, up from less than 1.20 just two years ago—you have a huge increase in buying power for Europeans.

As you might expect, Europeans are looking hard at U.S. real estate right now. For starters, the Euro/dollar exchange rate means they can basically buy at a 50 percent discount. They also believe American real estate is pretty close to the bottom. At the same time, the Europeans have their own recessionary problems on the horizon. In particular, as their luxury brand goods become more expensive for the rest of the world, their exports are falling.

The overriding urgency for Europeans interested in U.S. real estate is their worry that the American dollar, which is still the globe’s benchmark currency, will soon hit bottom and start to rise. Some predict the Euro will be back to 1.20 or 1.25 dollars in a year, and that its buying power of today will be gone tomorrow. Combine that with the sense that American real estate is a bargain right now, and you understand why Europeans feel compelled to make a move.

Today I am finding my buyers from the UK, Spain and Russia—they also have Euros—with Italy soon to follow. What they want is standing inventory, not pre-construction that will take three years to come on line. So they ask me what’s going on with the supply side.

In Miami, we have a huge oversupply. The good news is that nothing new has been started for the last two years and won’t be started for another year. By the time anything new is delivered, the over supply will be a thing of the past—as will the buying opportunities.

Let me give you an example of the buying opportunities today. We had one large condominium project that we sold at $375 a square foot. So, a 1,300 square foot unit cost almost $500,000. Today, you can buy that same unit from the developer for $275 a square foot, or for $357,500. That’s a highly competitive price, but for the developer it avoids the cost of letting the supply sit there, paying maintenance fees, taxes, construction interest, etc. Most developers with excess inventory are doing the same, marching forward at $300 a square foot or less. When you add in the Euro discount, it’s more like $200 a square foot for them, or the equivalent of paying about $260,000 for a condo that once cost $500,000.

It’s not just the Europeans, either. Just about all currencies are strong against the dollar right now, from the Japanese Yen to the Brazilian Real. So you have pockets of foreign buyers out there, buying packages of units with the intention of renting them until the market shifts. My job is simply working out deals with the developers. The biggest problem I have is finding the mortgage money to close those deals. When that money flows again, you will see an end to the real estate recession.

By Craig Studnicky