We all know now that Brexit is not the name of a new breakfast muffin being served at Starbucks.
Yesterday, UK voters voted in support of a referendum to decide whether the United Kingdom should leave or remain in the European Union. The anti-EU supporters won by 52 percent to 48 percent.
Almost 72 percent of the voters turned out, with more than 30 million people voting. It was the highest turnout in a UK election since the 1992 general election.
You will find more statistics at Statista
What does it mean for you (a member of the real estate industry)? Everything and nothing.
What’s the EU?
First, some details:
The European Union — often known as the EU — is a partnership of 28 European countries. Its goal is to encourage economic co-operation. If countries work together economically, you are less likely to wage war on each. That part of the bargain has worked.
Another unofficial promise is the partnership would give the European countries the oomph to compete with the likes of other global economic powers — like the United States, Russia, India and China. That has not met its promise.
What is ‘Brexit’?
It is a word — or, better, a political slogan — that is shorthand for saying the UK should leave the EU — Britain + exit = Brexit.
A proposed Greek exit from the EU was called Grexit. The Greek anti-EU forces failed. Yesterday, the Brits went the other way.
Both doomsday forces (the DOW shed 500 points today in early trading upon the news) and “so what” voices are today debating the consequences.
For example, Inman’s economic writer Lou Barnes wrote this morning that the Brexit vote is good news for real estate. He points to lower mortgage rates because of the flight to U.S. Treasuries.
I am less sanguine.
What’s it mean for politics?
Brexit points to the tension, isolationism, nationalism and fear in the world and how politicians face a collision course with the public, which is angry and distrustful and therefore acting out at the ballot box.
Consider the political base of two opposites — Trump and Sanders. People are sick of the inside job.
But angry public sentiment has consequences, some good and some bad. Take Arab Spring, which was an understandable uprising but had dire consequences for the region and the world.
As Jon Stewart said, ““You have to remember one thing about the will of the people: It wasn’t that long ago that we were swept away by the Macarena.”
So, why should a real estate agent in Omaha or a homebuyer in West Texas fret about Brexit?
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What’s it all mean?
I would argue that the Brexit vote is part and parcel to an overall uncertain political and economic environment that is brought on by politicians who are not listening.
The result: many people are sitting on the economic sidelines. Every wealthy person I know is staying liquid, is feeling rather pessimistic and is not investing in the economy. Why do you think the luxury housing market is stalled?
Now, what can you do about it? You can cannot control the weather, politicians or global economic insanity.
But I would advise that you be prepared to weather a storm, should there be one.
Many experts do not expect anything to happen this year, but worry about 2017. Politicians do their best to keep things propped up during an election. After that, anything goes depending on who is elected and what they do once in office.
Work on what you can control. Don’t spend all of your money on a new car; save as much as you spend; grow smartly and make sure you have a nest egg.
In 2008, many real estate agents and companies drank their own market-happy kool-aid and were in ruins when the market crashed.
Is this a market crash coming? I don’t know.
But I am not spending like the party will never end. That is never a good strategy.
