U.S. dollar’s slide creates buying opportunities for domain names.
I first wrote about how the “cheap” U.S. dollar was affecting domain name prices back in April 2005. I wrote about it again in February of this year. Well, the dollar keeps falling and the effect is becoming even more apparent.
The Canadian dollar is now roughly on par with the U.S. dollar. People in North American are used to seeing two prices on books and magazines: A U.S. price and a slightly higher Canadian price. Now the two currencies are equal.
Other currencies, including the Euro and British Pound, have also appreciated against the U.S. dollar.
Consider a domain buyer in Europe. If he was willing to pay $100,000 USD for a domain 5 years ago, that would have cost him about EUR 100,000. Today, if he is still willing to pay EUR 100,000, that would equal about $142,000! Of course, if the domain still cost $100,000 then the buyer would be getting a good deal in his mind.
Here are the affects of the weak dollar on the domain market:
-Buyers outside the U.S. get “cheaper” domains or are willing to pay more
-Sellers in the U.S. have strong buyer demand from outside the U.S.
-Non-U.S. sellers find it harder to sell into the U.S. market
This isn’t just theory. It’s economics. When I was in New York for the SedoPro Partner Forum, I sat next to a domainer from Europe on the bus ride to the resort. He said his company was actively buying domains. I commented that he must be thankful for the strength of the Euro. His response: “That’s a big reason we’re buying right now”.
I’ve had quite a few non-U.S. domain companies contact me about advertising lately. Suddenly, a few hundred U.S. dollars on an add costs them a fraction of what it did a couple years ago.
U.S. domain owners should be thankful they have some of their money invested in domains rather than sitting in the weakening dollar. The domain investment portion of their portfolio is somewhat of a “hard asset” (yes, I just called a domain name a hard asset like real estate). As the dollar falls, the value of domains remains somewhat stable — if not growing — on a global scale.