Brazilian Investors Eye U.S. Real Estate as a Safe Haven Amid Economic Turbulence

Facing a storm of rising inflation, steep interest rates, and a weakening currency at home, Brazilian investors are increasingly turning to an unlikely refuge: the United States housing market. In 2025, America’s real estate sector presents a complex picture – soaring mortgage costs and tight inventory on one hand, yet resilient home prices on the other. This dynamic, data-driven look at both economies reveals why dollar-denominated U.S. property has become a compelling diversification play for Brazilians seeking stability.

By Gil Hackl

U.S. Housing Market in 2025: High Rates, High Prices, Tight Supply

The American housing market is entering 2025 with stubbornly high home prices despite rising headwinds. The median price of an existing home hit $396,900 in January – up about 4.8% from a year earlier​, according to the National Association of Realtors.

This marks the 19th consecutive month of year-over-year price gains​, underscoring how resilient housing values have been even as buyer demand pulled back. Analysts at J.P. Morgan expect prices to keep rising modestly (around 3%) in 2025​, a testament to the market’s underlying strength.

Mortgage rates, however, have climbed to two-decade highs. After the U.S. Federal Reserve’s rapid rate hikes – lifting its benchmark from near 0% in 2022 to over 5% by 2023​ – the average 30-year fixed mortgage surged. It briefly neared 8% in late 2023, the highest since 2000​. By early 2025, rates hover around 6.8–7%​,essentially double the borrowing costs of just a few years ago. “Mortgage rates have refused to budge… When combined with elevated home prices, housing affordability is being tested,” noted Lawrence Yun, chief economist of the National Association of Realtors​. The spike in financing costs has indeed cooled activity – home sales are running at only about 4.1 million (annualized), down sharply from the boom of 2021​. Would-be buyers are either priced out or waiting on the sidelines, and mortgage applications recently hit a 28-year low as higher rates bite​.

Yet the slowdown in sales has not translated into a glut of homes on the market. In fact, housing inventory remains historically tight. At the end of January, the inventory of unsold existing homes was just 1.18 million units, equal to 3.5 months’ supply at the current sales pace​. That’s an improvement from barely 3 months’ supply a year ago​, but still well below the roughly 6 months considered a balanced market. The reason: American homeowners who locked in 3% mortgages during the pandemic are loath to sell and give up those ultra-low rates. This “lock-in effect” has strangled the supply of resale listings. New data show the number of homes on the market is still about 20–30% below even previous lows, despite a recent uptick in listings​.

Homebuilders have raced to fill this gap. New construction has become a bright spot, with builders gaining confidence and ramping up projects. By December 2024, new single-family home inventory swelled to roughly 494,000 units – about 10% higher than a year prior​. This represents an 8.5-month supply of new houses for sale​, the highest level in over a decade. Builders managed to sell homes faster than expected too: new home sales ended 2024 up 2.5% from the prior year​, thanks in part to eager buyers frustrated with the dearth of resale options. “Limited resale inventory conditions” helped new home purchases rise, the National Association of Home Builders noted, even amid affordability challenges​. Overall, when combining both new and existing homes, total supply on the market is estimated at only 4 months as of late 2024 – still far from a balanced market​. In short, America’s housing sector is cool but not frozen: high interest rates have tempered demand, but scarce supply continues to prop up prices.

Economic conditions will play a decisive role going forward. Inflation, which had peaked above 9% in 2022, has cooled to around 4% in the U.S., and the Federal Reserve has signaled a potential easing of rates. However, any relief has been slow. The Fed’s tight policy and global economic uncertainty (including trade disputes) are keeping long-term borrowing costs elevated. If inflation flares up again or the Fed stays “higher for longer,” mortgage rates could remain around 7%, further constraining buyers​.

On the flip side, if price pressures ease, 2025 might finally bring some mortgage relief (Freddie Mac forecasts rates dipping slightly to the mid-6% range by year-end). But even in a best-case scenario, nobody expects a return to the 3% loans of 2021. The era of cheap money is over, and the housing market’s new normal is defined by scarcer credit – a reality that both U.S. homebuyers and foreign investors must account for.

Brazil’s Economic Crossroads: Inflation, High Rates, and the Diversification Dilemma

While U.S. homeowners grapple with expensive loans, Brazilians face an even tougher financial climate at home. Latin America’s largest economy has been stuck in a cycle of high inflation and high interest rates that is testing investor confidence and the value of its currency, the real. Officially, Brazil’s inflation closed 2024 at 4.8%​ – not extreme by historical standards, but above the central bank’s target and creeping higher. More worrying are the expectations: markets now predict consumer prices around 5% in 2025, drifting further from the 3% goal​. This persistence of inflation, combined with fiscal concerns, has forced Brazil’s central bank into aggressive action.

After a period of monetary easing earlier in 2024, the Central Bank of Brazil abruptly reversed course as price pressures re-emerged. In late January 2025, policymakers delivered a 100 basis-point rate hike, raising the benchmark Selic rate to 13.25%​. Another identical hike is signaled for March, which would bring the Selic to 14.25%, the highest level in over 8 years​. Private economists are even more alarmed – major banks now foresee rates climbing above 15% and staying there for much of the year​. “Deteriorating inflation expectations, a weaker currency and lingering fiscal worries” are driving these upward revisions, Reuters reported​. In effect, Brazil is plunging back into tightening mode to shore up credibility, even as such punishing rates risk dampening economic growth.

The Brazilian real has been a barometer of these troubles – and a source of pain for investors. After starting 2023 around 5 Brazilian Reais per US dollar, the real steadily lost ground. By the end of 2024, it plummeted to roughly R$ 6.17 against the dollar​. At one point in December, the currency hit an all-time low of R$ 6.29 to the dollar​, before recovering slightly. All told, the dollar gained 27% against the real over 2024​, dramatically eroding Brazilians’ purchasing power for anything priced in dollars. For context, a Brazilian investor holding savings in reals would have seen a quarter of their wealth (in US dollars terms) evaporate in a single year due to FX depreciation. This kind of drop, reminiscent of past crises, has set off alarm bells. Analysts expect the real to remain under pressure into 2025, likely hovering around R$ 6 per $ 1 amid Brazil’s fiscal woes and a globally strong dollar​.

The fragility of the real and the burden of high interest rates have created a challenging paradox for Brazilian investors. On one hand, keeping money in local bonds or savings yields a very high nominal interest (with the Selic above 13%, Brazilian government bonds offer among the world’s highest interest rates). On the other hand, inflation and currency devaluation threaten to offset those gains. Brazilian Real devaluation has become a tax on wealth, incentivizing locals to seek refuge in harder currencies and assets. Even Brazil’s Finance Ministry recognizes the need for outlets: it has floated new currency hedging tools and reforms to facilitate investment abroad​, acknowledging that pent-up demand to diversify is growing.

Compounding these domestic strains are external headwinds. Trade tensions with the U.S. have recently flared up again, injecting uncertainty into Brazil’s export outlook. In early 2025, the United States announced plans to reinstate a 25% tariff on imported steel and aluminum – a move aimed partly at China but directly impacting Brazil, one of the top suppliers of steel to America​. Brazilian steel exports were already down 18% in 2024, and about 3.4 million tons of steel (mostly slabs) were sold to U.S. buyers that year​. The prospect of new tariffs or strict quotas on those shipments has officials in Brasília scrambling for diplomatic solutions​. More broadly, the return of U.S. protectionism – with tariff threats extending to ethanol, commodities, and other goods – rattles investor confidence. It signals that Brazil’s economic recovery is at risk not just from internal problems but from geopolitical shifts beyond its control.

“Diversificar” has become the mantra for Brazil’s investing class. Traditionally, wealthier Brazilians might keep the bulk of their assets in local real estate, domestic stocks, or fixed income. But the events of the past two years – inflation scares, a roller-coaster Selic, a suddenly feeble real, and now trade uncertainty – have made the case for diversification across borders. In practical terms, this often means moving capital into U.S. dollar assets. Holding part of one’s wealth in dollars (so-called “dollarization” of the portfolio) is seen as a hedge against the real’s volatility. As one asset manager put it, “Our currency may pay 13% interest, but if it loses 20% of its value, you’re worse off. We need assets that keep value in hard currency.” For many Brazilians, that means looking beyond Bovespa and into global markets – with U.S. real estate emerging as one possible destination.

Buying Stability: Brazilians Turn to U.S. Real Estate for Diversification and Dollar Safety

It might seem counterintuitive: Why would investors from a country with double-digit interest rates be interested in U.S. houses that yield far lower returns? The answer lies in stability and currency protection. The U.S. real estate market, for all its cyclical ups and downs, is anchored in the world’s largest economy and denominated in U.S. dollars – a currency that, in times of global uncertainty, tends to strengthen. For Brazilian investors, buying property in the U.S. is not about chasing spectacular gains; it’s about preserving wealth and achieving a measure of financial security that domestic assets currently struggle to provide.

The case for U.S. housing investment comes down to a few key points: First, steady appreciation. Over the long run, American home prices have trended upward at a moderate pace (on average a few percent above inflation annually). Even in the face of the 2020 pandemic and the 2022–2023 rate shock, U.S. home values nationally are higher today than ever​. This proven resilience appeals to those who worry about the value of their money over time. Second, rental income opportunities. For an investor from São Paulo or Rio de Janeiro, owning a rental condo in Miami or an Airbnb property in Orlando (popular choices for Brazilians) can generate income in dollars. The U.S. rental market is strong – vacancy rates are low, and rents have been climbing in many cities due to housing shortages. That income stream, converted to reals, can help offset inflation at home. Third, and perhaps most importantly, hedging against Brazilian Real devaluation. If the real continues to weaken, an investor’s U.S. real estate holdings rise in local-currency terms. For example, suppose the real depreciates another 10% next year; a Miami apartment valued at $300,000 would effectively be worth 10% more in reals without the property itself changing at all. This currency hedge is a primary motivation for dollarization through assets like real estate.

Investors have multiple avenues to access U.S. real estate, depending on their resources and risk appetite. Direct property purchases are a common route for those with substantial capital. Notably, the United States places no restrictions on foreign buyers purchasing residential property – overseas investors enjoy the same property ownership rights as Americans​. This means a Brazilian citizen can freely buy a house, condo, or even land in the U.S., title it in their name, and later sell or rent it as they wish. In recent years, Brazilians have been among the top foreign buyers of U.S. homes. In the 12 months through March 2024, buyers from Brazil accounted for roughly 4% of all foreign purchases of U.S. residential property​, by one industry estimate – putting Brazil in the top 5 countries investing in American housing. Popular targets include Florida, especially the Miami and Orlando areas, which offer cultural familiarity and attract Latin American investors, as well as New York and Texas. Real estate professionals note that Brazilian clients often seek out new condominium projects or vacation homes that can double as rental investments when they are not in the U.S.

For those who prefer a more hands-off or liquid investment, financial instruments tied to real estate provide alternatives to owning physical property. One option is REITs (Real Estate Investment Trusts) – essentially companies that own portfolios of properties (such as shopping centers, apartment complexes, or hotels) and trade on stock exchanges. A Brazilian investor can buy shares in U.S.-listed REITs or in international real estate mutual funds/ETFs through a brokerage account. This approach offers exposure to the U.S. property market with far less capital and the ability to sell quickly, though it introduces market volatility (REIT share prices can swing with the stock market). Another avenue is through real estate funds and partnerships. In response to demand, some Brazilian financial firms have created feeder funds that pool money from local investors to deploy into overseas real estate projects – be it development deals or property acquisitions – thereby lowering barriers to entry. These indirect methods allow investors to dollarize part of their portfolio without the complexity of managing a property abroad. They also avoid certain tax and legal hurdles; for instance, non-resident buyers of U.S. property can face foreign withholding taxes when selling (under FIRPTA law), whereas holding a REIT may be more straightforward from a tax perspective.

Risks and caveats naturally accompany these opportunities. For one, investing in a foreign market carries currency risk in both directions. While a weakening real boosts the local return of a U.S. asset, a suddenly strengthening real (or weakening dollar) would do the opposite. If, say, Brazil’s fortunes reverse and the real appreciates significantly, a Brazilian’s U.S. house would be worth fewer reals than before – an unlikely scenario many might think today, but not impossible over a multi-year horizon. Additionally, liquidity risk is higher for direct real estate. Selling a property can take months and incur hefty transaction costs (agent commissions, closing fees), unlike selling stocks or bonds with a few clicks. Investors must be prepared to tie up funds long-term or face potential losses if they need to liquidate in a hurry.

There are also management and legal considerations. Owning property abroad means dealing with another country’s laws and expenses. Landlords will need trusted local property managers, especially if they don’t reside near the investment. Maintenance, insurance, property taxes, and potential vacancies are ongoing concerns. Different market dynamics – from tenant rights to eviction processes – can be a learning curve. Taxation is another factor: rental income from U.S. property may be subject to U.S. taxes (though treaties and foreign tax credits can help avoid double taxation). It’s essential for international investors to consult professionals on how to structure their purchases (some use LLC companies or other vehicles) to optimize tax and liability exposure.

Bottom Line: Turbulent times in Brazil have set the stage for a diversification drive, and U.S. real estate stands out as a viable, accessible option to protect and grow wealth. The American housing market in 2025 offers a mix of challenges – high interest rates and low inventory – yet continues to deliver steady price growth and relative stability. For Brazilian investors battered by domestic inflation and a falling currency, an apartment in Miami or a stake in a real estate fund isn’t just an investment; it’s an insurance policy denominated in dollars. Like any strategy, it must be tailored to one’s risk profile – not everyone can or should take on the costs of foreign property ownership. But as the data shows, a carefully chosen U.S. real estate investment can provide both diversification and dollarization, two qualities in great demand as Brazil navigates its economic crosscurrents. In a world of uncertainty, a house on more solid ground – figuratively and literally – has enormous appeal.

About the Author Gil Hackl is an economist, finance professor, and entrepreneur with experience in multiple ventures across the globe. He shares insights on economic trends, market dynamics, and real estate developments based on his global perspective and research