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Canadians looking in Fla. told it’s time to buy
TORONTO, Canada – Feb. 10, 2014
The epic beach party might not be over yet, but the economic tides are starting to inch a little closer for aspiring Canadian snowbirds.
A pair of concurrent trends over the last year have chipped away at the historic buying power Canadians enjoyed in the American Sunbelt since the financial crisis: a 10 percent decline in the loonie coupled with a roughly 10 percent rise in U.S. housing prices.
Each percentage point washes away a piece of the bargain.
There are still deals to be had, as sunbelt housing prices haven’t fully recovered from the 2008 crash – but Canadians should be aware that they’re entering a much more competitive market.
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To illustrate that point, one longtime real-estate agent points at a Boca Raton highrise.
“If you ask me about that apartment (and say), ‘I’d like a two-bedroom,’ what you’re asking for might be sold,” says Sandy Yacker, motioning toward a random building as she drives up Florida’s coastal highway.
“I’d have to show you another building. We don’t have any inventory. The inventory was plentiful two years ago – now there might not be any in that building.”
Yacker’s seen a lot in her 74 years, nearly all of it spent in Florida and much of it spent working as a real estate agent.
She remembers seeing the elegant clothes along Miami’s South Beach, in a distant era when women wore gowns and men wore suits instead of today’s dental-floss fashions along Ocean Drive. She believes that was Harry Truman’s presidential motorcade she saw as a girl once, rolling by on Flagler Street.
But she’s never seen anything like 2008.
In her own condo complex, one-bedroom villas that had gone for US$280,000 were suddenly being panic-sold at $110,000 by frail seniors who had to sell in a hurry, because they needed to move into specialized homes.
She says those units are now going for about $170,000, after a bounce last year. The latest trend might mean lesser deals for bargain-hunting foreigners, but what a relief for homeowners pounded by the crisis.
“It was a shock to your pocketbook,” she says of 2008.
“It’s no question… It was disturbing if you were trying to sell if, God forbid, an emergency came up – if a person got sick and couldn’t stay in their home,” Yacker said.
“But it’s started to rise in price.”
The shift is confirmed in numbers from the U.S. National Association of Realtors for 2013. They say U.S. sales activity increased by 9.1 percent, for their best year since 2006. The median home price shot up 11.5 percent, the biggest increase since 2005.
Meanwhile, though, U.S. home purchases by foreigners edged backward in 2012-13.
International-purchase numbers for the last calendar year aren’t out yet, but through March 2013 the total was $68.2 billion – still high, historically, but much lower than the $82.5 billion from 2011-12.
Canadians are the biggest international buyers of those U.S. homes, comprising one-quarter of foreign purchases. And Florida is their No. 1 choice – with 39 percent of Canadian purchases occurring there. That’s followed by 24 percent in Arizona, and single digits in California, Hawaii, Texas and other states.
One economist predicted an impact from the currency fluctuation, albeit a limited one.
Statistics crunched by the TD Bank for The Canadian Press suggest a 10 percent decline in the loonie likely means 250,000 less visitors per year to Florida, and a decrease in spending of about 0.7 percent of the state’s GDP (or somewhere between $250 million and $400 million).
But there’s a notable asterisk: Canadian visits to Florida have been growing so rapidly in recent years that even a dip would likely just mean that the growth continues, only slower.
This is after years in which Canadian visits to Florida increased 12 percent in 2010, followed by 6 percent, 6 percent and 3 percent in 2013. For this year, TD projects an increase in Canadian visits to the Sunshine State of two percent.
“I think the longer-term period of rapid growth – at least for the next few years – is probably behind us. I think we will see a pause in that trend,” said Derek Burleton, the vice-president and deputy chief economist of the TD Bank Financial Group.
“I’d say growth (is) pausing, but I don’t think we’re going to see the level of Canadian spending and involvement in the real-estate market go back to where it was five or 10 years ago (before the crash).”
He said the currency fluctuation will be felt far more in the northern U.S., in areas that have come to benefit from Canadian cross-border shoppers.
As for the Sunbelt, he said, the economics become a secondary factor. People are drawn there for reasons other than cost-savings and, with baby boomers retiring, he predicted Canadians will keep visiting and snapping up property to be close to the beach and the sunshine.
Bob Slack, a retired school principal from Ontario who has a home near Lakeland, Fla., concurred with that assessment.
Slack bought a home in Florida 16 years ago and has witnessed economic shifts before. He said people might spend a little less on a house, a little less on meals in restaurants, and a little less time on the golf course.
But they’ll mostly keep coming.
“There are many ways snowbirds cope with a fluctuating dollar,” Slack said. “People just adapt.”
Copyright © 2014 The Canadian Press, Alexander Panetta
RE-SOURCED: © 2013 Florida Realtors®
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