Can the opioid crisis cause a high-end property crash?

The latest victim of the opioid crisis is the life expectancy rate in the US. As opioid deaths increased and related suicide rates went up. According to the chief of the Analytic Studies Branch of the National Center for Health Statistics (NCHS), Renee Gindi: “It’s really the first time we’ve seen this multi-year drop” in decades.

But could there be another victim related to the life expectancy crunch: High-end property prices? Probably not, as people come to America for more than just a higher life expectancy, as we will explain below.

Traditionally, capital cities with high popularity among multi-nationals, always saved property markets from recession – and helped them see a quicker recovery. Name it: London UK, Geneva, Sydney Australia, Berlin, Paris, New York and many more. These cities all thrive because they managed to attract high-end real estate investors who seek out the lifestyle. Yet many of these cities do not offer the scale advantage of the American economy.

Lifestyle investors typically take into account a variety of factors, including corruption index, the ease of doing business index – and certainly, the life expectancy of a country. Perhaps this explains why Spain, in Southern Europe, had managed to turn the corner on a property crash that was fueled by a recession and declining population.

America has a strong economy: This is hands down the biggest advantage it has over places like Spain, South Africa and Brazil. The feeling is that people will still bring huge investments to America – but may be more careful about the neighborhoods they invest in.

Suicide rates are not murder rates:

It is one thing to decline a lifestyle investment because it is outright dangerous to leave your home: as is the case in much of South Africa and Brazil – but suicide rates are not necessarily a threat to people who are prudent with their own health and wellbeing.

The example of Cape Town, South Africa:

Not too long ago, Cape Town was voted the most popular city in the world by expats – it had great appeal. But then came murder rate statistics in a country that is dominated by crime, genocide, HIV and affirmative action. The ultimate victim was high-end real estate.

Rio de Janeiro Brazil:

It was thought that Rio de Janeiro would defy the economic downturn in Brazil, largely due to it’s appeal among international investors. This was not the case: As the economy declined, crime rates shot up – as did corruption, which ultimately caused wealthy investors to decline.

Will the tide turn against opioids?

With the opioid crisis, it is easy to see a situation where we move one step forward and two steps backwards. Indeed the Trump administration did a lot to fight it – including the introduction of the New Farm Bill. This in turn allow for the production and sales of CBD cannabidiol, which in itself is considered a more natural replacement for addictive opioids. Ultimately, there is a fight between evil and good. Those profiting from opioids need to rethink their business model and act for the greater good.

The bottom line, is that if the overall property market crashes due to toxic loans – yes, the high-end market may get dragged down with it. However it seems that life expectancy on its own, without a spike in violence or gun crime, may not be enough to cause a dent in the high-end property market. The contrary: It may drive people TO that market as they seek a better lifestyle.