Lower prices and the strong Canadian dollar are encouraging one in five Canadians to buy U.S. property today, according to a new survey of by the Bank of Montreal.
Overall housing prices in the United States have fallen by 30 per cent over the past four years. However, prices in regions that are traditionally destinations for Canadian snowbirds have dropped even more. For example prices in Tampa have dropped 44 per cent, Phoenix, fell 54 per cent, Las Vegas, 57 per cent, and Miami, 49 per cent.
“Now, with the American economy and employment gaining strength, home sales should pick up and put a floor under soft prices,” said Sal Guatieri, Senior Economist, BMO Bank of Montreal. “We expect prices to rise over time as the overhang of unsold homes eases.” Guatieri added that beyond this year over the long term the U.S. dollar should strengthen as well. This would provide an opportunity for capital appreciation for Canadians who purchase U.S. property at a low price while the Canadian dollar was high.
Regionally, those in Alberta (31 percent), British Columbia (28 per cent), and the Prairie Provinces (27 per cent) are most interested buying property in the U.S, according to the survey by Leger Marketing, which was conducted immediately after Spring Break, a time that traditionally draws Canadians to Florida beaches and Arizona deserts.
Last year Canadians were the largest source of foreign investors in U.S. residential real estate, accounting for 21 percent of all foreign sales, according to the National Association of Realtors. International buyers were active throughout the U.S., but seven states (Florida, California, Arizona, Texas, Georgia, New York, and Nevada) accounted for 65 percent of the volume.
Canada’s real estate, by contrast, has been tough on bargain hunters. The national average price for homes rose 8.8 per cent year-over-year in February. The Canadian Real Estate Association said the national average price for a home rose to $365,192 in February, but that includes a record number of multimillion-dollar home sales in the Vancouver area that skewed the average price numbers.
”When you take Vancouver out of the equation, the year-over-year increase in the national average price drops to 3.4 per cent,” Gregory Klump, CREA’s chief economist said in a statement. ”While that’s still stronger than in the past six months or so, national average price gains may recede after tighter mortgage regulations take effect in March.”