Homes are more affordable in Europe than in the US
According to the National Association of Realtors, the median price for a home in the US reached $416,000 in June 2022. This represents an increase of nearly 20% in a single year. It puts home ownership out of reach for many Americans, even those who are in the upper-middle class earning bracket, are in their late 30s or 40s, and have considerable savings in hand – sometimes as much as $300,000.
In comparison, it is easy to buy a spacious home in small Portuguese, Spanish, Italian, Greece or Maltese towns for just $60,000-$80,000. These small towns of southern Europe are underpopulated and are looking to attract expats who have money to invest.
Data from the Pew Research Center shows that, in 2021, one-quarter of American adults between 25 to 34 were living in a multigenerational household, i.e., with their parents, grandparents, or older siblings. That number was only 9% back in 1971 when the Boomer generation were young adults.
It is clear that Millennials and Gen Zs face an impossible real estate market. Already saddled with student debt, they are less keen than their parents on applying for a mortgage. Indeed, according to the Mortgage Bankers Association, mortgage applications in the US are at their lowest level since the new millennium. So currently, moving abroad to buy a home looks like a smaller risk than accumulating more debt.
The international purchasing power of US expats has risen with the dollar
In 2022, the US dollar hit parity with the euro. Previously, the euro was worth about 1 to 1.5 times more than the dollar. This gives young middle-class Americans more economic power to move abroad. In the past, it was mainly only retired or wealthy Americans who invested in European real estate, but this is no longer the case.
Sotheby's reports that Americans' interest in moving to Greece jumped by 40% in the mere three months of April-June 2022, while the real estate agency Knight Frank reports that Americans' interest in moving to France and Italy is the highest in three years. The pandemic and Great Resignation have normalized remote working and job-hopping, both of which facilitate relocating abroad.
In addition, some European countries have launched special visas to lure digital nomads to come and settle in underpopulated regions and boost the local economy (Forbes, February 2022). The last country to announce a digital nomad visa is Spain, while Georgia, Croatia, the Czech Republic, Iceland, Germany, Norway, Portugal, Malta and Hungary already have such programs.
A strong dollar ensures that most US expats can meet the income or investment threshold of these digital nomad visas. The required income can be as low as $600, as in Portugal, but hovers around $2000 in most countries – a middle-class salary. The visa requires the applicant to be a freelancer earning an income from abroad or to be working remotely for a company based abroad. These two work situations have been very common since the pandemic.
Europe is safer
Finances are not the only thing driving American expats to Europe: politics is also causing outmigration. The pervasiveness of gun violence in the US and the overturning of abortion rights have made some Americans doubt whether their country is the best place to raise a family.
The elementary school shooting in Uvalde, Texas, has rattled American families, especially those with young children. Even after 19 children and two teachers were killed in that shooting, the government is still not taking concrete measures to restrict access to guns. In a July 2022 article in Bloomberg, Jamie Dixon, an American digital nomad living in Portugal, said that she decided to move there from Los Angeles last year in order to give her young child “a normal childhood.” Her main reason for moving was anxiety about violent crime, not finances.
In June 2022, the US Supreme Court overturned the historic 1973 Roe v/s Wade ruling that guaranteed Americans the right to have a safe, legal abortion in all states. The Institute of International Education reported a big spike of 83% in US students looking for information about studying in Europe right after the ruling. The spike came especially from red states, that is, Southern and Midwestern states where Conservatives hold a lot of power. Young people, especially women in conservative states, will be the most affected by their state's criminalization of abortion. As most European countries have legal, often even state-funded, abortion services while having the same standard of living as the US, it seems safer to be in Europe right now.
While there are cons to moving to Europe, such as higher income tax rates, lower salaries and more bureaucracy, many US expats think that the pros outweigh the cons. Their economic power and the safety net in Europe make it easier not only to buy a house but also to raise children and retire early.
