Buying U.S. Properties
Rubina Ahmed_Haq Thursday, March 08, 2012
DURING THE COLD Canadian winters, do you think about having a place in Florida to escape to? Or lounging on the terrace of a sunny Arizona property? If you do, you’re not alone. The housing market in the U.S. remains deeply discounted, and these are the two most popular destinations for Canadian snowbirds. Here’s what you need to know when buying a property in the U.S.
Real Bargain Ins and Outs Real estate agents caution that prices are not as low as they were last year. Sally Daley is a Realtor in Vero Beach, Fla., and says, “Be realistic when shopping. You’re not going to get a beachfront property for $40,000.” If this is an investment, make sure there are amenities nearby that will attract renters, like access to the beach and major attractions. Remember, you get what you pay for; good properties are still more than $200,000 in Florida. Never buy a property without seeing it in person.
Quick Profit Realities According to Realtors in Florida and Arizona, you should not expect an increase in property value for a few years. The interest in U.S. real estate is largely coming from foreign investors. The U.S. homeowner is sitting on the sidelines waiting to see if the economy will bounce back. For this reason, experts say the U.S. housing market could remain depressed for a decade as the country waits for domestic demand to return.
Currency Risks Daley says one of the biggest drivers in the U.S. markets has been the loonie touching parity with the greenback. Joe Mancini owns a heating and cooling business in the GTA and recently purchased a property in Phoenix. He fell in love with the area on a recent trip to visit a friend. He says the dollar being at par was a big reason for the purchase. If the U.S. dollar were to weaken, this could create a downside risk for Canadians invested in U.S. real estate.
Transportation Costs Make sure the area you settle on is well serviced by Canadian and U.S. carriers. Also, be ready to drive to your winter home if airline tickets become too expensive. Pierre Cloutier bought a property in Vero Beach in 2010. He used Daley as his Realtor. The engineer from Montreal says the ease of travelling to his vacation home was key in his purchase decision. “Florida was the right thing to do — good weather, easy transportation, a good network of Canadian banks, a family-friendly environment, and close to the beach,” he says. He also knew he could drive to his vacation home if he had to.
A Long-Term Vacation Spot It’s a very specific client who buys a winter home in the U.S. It’s hard to justify a holiday anywhere else when you’ve spent $250,000 on a holiday home. Be prepared for a similar holiday experience for many years. Cloutier, a father with young children, says it’s the perfect situation for him because it removes unpredictability from family trips.
In Conclusion There are many things to consider before you take the plunge and buy what looks like a real bargain in the U.S. Even though prices are down 30 to 50 per cent in some areas, you still need to do your research and practice due diligence.
Rubina Ahmed-Haq is a personal finance journalist, the finance expert on CBC's Steven and Chris Show, a freelance writer for Moneyville.ca, business commentator on NEWSTALK 1010, and columnist for RateSuperMarket.ca. Visit alwayssavemoney.ca, or follow Rubina on Twitter @alwayssavemoney.