Canadians snapping up U.S. homes.
Think of it as Manifest Destiny in reverse. At the time of the American Revolution, the War of 1812-14 and the U.S. Civil War, sentiment was widespread in the U.S., particularly among politicians, that the U.S. should annex Canada.
Today, Canadians have eclipsed Britons as the major foreign buyers of Florida real estate. Canucks are giving "cross-border shopping" a new definition in distressed Arizona, as well, where a strengthening loonie and depressed local housing prices are making Canadian ownership of a sunspot home almost irresistable.
Says Arnold Porter, Canadian owner of Phoenix-based realtor Arizona for Canadians:
Canadians are absolutely dumbfounded when they see the prices here. You have this rare perfect storm in the United States where you have low interest rates, still falling prices and a Canadian dollar that keeps going up.
In a nutshell, U.S. house prices in Florida, California, the U.S. Southwest and Midwest, where the collapse of the record U.S. housing boom earlier this decade have hit hardest, have collapsed by about 50% at the same time the Canadian dollar has gained about 50% against the U.S. dollar. The loonie is expected to reach and exceed parity with the greenback this summer, up from its current 98.2 cents U.S.
It's now actually possible to buy a property in, say, Florida, for the cost of a year's worth of parking at an upscale Toronto condo development. As reported by Tony Wong in today's Toronto Star, Torontonian Stacey Lynn bought a newish, 500-square-foot one-bedroom condo in upscale Naples, Fla., near the beach for $54,900 - or $1,000 less than an extra parking spot commands at the yet-to-be completed Ritz Carlton hotel-condo development in downtown Toronto.
For good measure, Lynn bought a second, 900-sq.-ft. condo, in Sarasota, Fla., for $86,000. In both cases, she paid less than $100 (U.S.) per square foot, less than one-third of the $350 rate in Toronto, where house prices have risen for 13 consecutive years, even during the latest recession.
There are caveats. Out-of-state homeowners in Florida are hit with higher municipal taxes than in-state buyers. And in states especially devastated by the housing-price collapse, notably Florida and California, prices could keep falling. Those two states, where property is most highly coveted by sun-starved Canadians, still suffer among the highest foreclosure rates in the nation.
Says Philip McKernan, author of South of 49: The Canadian Guide to Buying Residential Real Estate in the United States:
You can buy foreclosed homes in Detroit for $20,000, for example, but the unemployment rate in that neighborhood could be at 50 per cent and you'll never get your money back.
Just the same, for Canadians craving a place in the sun to call their own, rather than schlepping south each year to lodgings they rent or lease, local U.S. prices and Canadian-dollar buying power are likely never to be more attractive. And their buying ardor is helping put a floor, finally, under residential prices in America's most depreciated neighborhoods.