Image: Anoldent / Flickr
With the loonie continuing to hover around parity with the U.S. dollar, Canadians are looking to buy more American products. And one of the most lucrative products they are thinking of buying are homes.
Now is a great time. Not only is the Canadian dollar getting stronger relative to the U.S. dollar, but interest rates in both countries are very low. At the same time, property values in the U.S. have plummeted, particularly in the Sun Belt. The result of all this is that many Canadians are finding great deals on retirement or vacation homes in the U.S.
According to the National Association of Realtors, an American organization, the top foreign buyers of U.S. property in 2009 were Canadians. Philip McKernan, the author of South of 49: The Canadian Guide to Buying Residential Real Estate in the United States, agrees that Canadians are being more aggressive when they buy real estate. He says, “There is certainly a greater confidence out there with Canadians. It’s not just economic. There is a sense that we are players on the world stage, whether it’s our banking institutions or more recently at the Olympics.”
The other factor is that the deals are just not comparable to anything in Canada. For instance, in Laveen, a suburb of Phoenix, a 1,700 square foot home built earlier this decade would cost about $100,000 U.S. Homes in Toronto and Vancouver of a similar size could cost four or five times this amount, even after factoring in the exchange rate.
Even more shocking – the house could sell for less. Unlike in Canada, where prices are beginning to rise again due to shrinking inventory and growing demand, demand is still very weak in many markets in the U.S. As a result, many homes sit for months without selling, or sell for far below their asking price.
Of course, it’s not all hidden deals. Many of the houses in the U.S. are cheap, but some will likely remain that way: Detroit, for instance has houses that are selling for $20,000. Some analysts wonder if Phoenix and Las Vegas, for instance, can ever regain the value that the homes were selling at, when they were at their peak. And as we’ve discussed in previous articles, there are a lot of things you need to consider before you think about buying homes in the U.S.
Unless you are a multi-million dollar investor, you should only ever buy because you love the property and want to sink your heart into it. And whenever you think about making a real estate decision, it is always a good idea to talk it over with a registered real estate agent first to make sure you understand all of the consequences.
Nelson Goulart
Broker of Record with Signature Service GMAC Real Estate
www.ssgmac.ca
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