Earlier this week we wrote a post about how buying foreign – both in Europe and the United States – was becoming increasingly popular for Canadians. But new stats from the S&P Case-Shiller 20-city home price index have shown that Canadians who want to own property in the States need to be very careful when making that decision.
The United States has been a haven for Canadian investors that wanted to get in on a great deal for the past four or five years. Once the housing market collapsed, Canadians seized the opportunity of falling home prices in cities that have gorgeous climate all year round, and markets that were so full of inventory, Canadian investors had their pick of the crop. Add onto that a dollar that was at par, and Canadians really were sitting pretty in the U.S.
Now though, that economy is churning at a much faster pace. And a few Canadians might find that it’s one they can’t keep up with.
The S&P Index showed that across the board, U.S. home prices rose by an average of 2.2 per cent, and it was the second month in a row that the country as a whole saw housing growth. And while that may be good for Americans, it’s not the good news Canadian investors wanting to get into the market had been hoping to hear. Especially since two of the most popular states for Canadians – Arizona and Florida – are areas that are seeing the most growth, and the largest increase in prices. You can see from the chart below that while Tampa may have only seen gains of just over 2 per cent, Phoenix had gains of 11.5 per cent – in just one month! And that means that Canucks who want to get into this market, need to do some serious thinking before they do.
Diane Olson, who once lived in Winnipeg and now sells real estate in Phoenix, said that the news isn’t all bad for investors who got in when the market was extremely low and are now just waiting for returns on their investment. In fact, says Ms. Olson, those individuals may already be seeing that return they’ve been waiting for. But those just getting into the market, or wanting to? They need to proceed with extreme caution.
Ms. Olson says, “The market has changed dramatically. It feels like we’re back to 2004 to 2006 in terms of sales activity.” She also remarked that in the Phoenix area, bidding wars are back on, and that it’s no longer unusual for her to see a single property garner five to ten offers.
Yes, it would seem that just as Jim Flaherty spoke several months ago of his concern about “the last condo buyer in Toronto,” there may now be a concern about “the last Canadian buyer in the States.”