Nearly one-in-three people in Alberta and British Columbia are interested in buying real estate in the United States, the highest ratio in Canada, according to a survey by the Bank of Montreal.
The study, done by Leger Marketing, showed that about 20 per cent of Canadians are looking to purchase U.S. property, but the interest spikes to 31 per cent in Alberta, 28 per cent in British Columbia and to 27 per cent in Manitoba and Saskatchewan.
The demand is fueled by a plunge in U.S. real estate prices, which have fallen more than 50 per cent from the 2007 peak in Sun Belt markets like Phoenix, Arizona, Las Vegas, Nevada and Miami Florida.
A recent real estate conference in Vancouver that focused on U.S. properties drew more than 650 potential investors, who were offered three-bedroom detached houses in Phoenix for less than US$130,000, or about one-third the price they sold new in 2007. U.S. agents also told of Las Vegas condominiums selling for US$50,000 to US$60,000, far below replacement value.
The strength of the Canadian dollar, now trading at or above par with the U.S. greenback, offers Canadians an "historic" opportunity to buy in the U.S. according to realtor Janet LePage of Vancouver, who concentrates on U.S. property.
"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 with Bank of Montreal. "We expect prices to rise over time as the overhang of unsold homes eases." He forecast that, over the long term, the U.S. dollar should strengthen, which would provide an opportunity for capital appreciation for Canadians who purchased U.S. property at low prices while the Canadian dollar was still high.
See the April issue of Western Investor for more information on buying residential real estate in the United States. The May issue of Western Investor features a report on investing in U.S. commercial real estate.
