Looking for New Prospects? Target Canadians

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 percent 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 percent, Phoenix fell 54 percent, Las Vegas 57 percent, and Miami 49 percent.

“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 percent), and the Prairie Provinces (27 percent) are most interested in 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 percent 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 percent,” 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.”

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