As we reported recently in our story Foreign Money Finds Home on the Range Leaving California Behind , Chinese nationals are the top group of foreign buyers of U.S. homes and are moving inland for lower prices. The Canadians, on the other hand, still prefer sunny states like California, and despite the falling value of the Canadian dollar, the high end of the market hasn’t been affected as much, say agents in Florida, California and Arizona—the three states with the most Canadian buyers.
Down about 10% over the past year, the falling Canadian dollar (also known as a “loonie,” due to the image of a loon on the dollar coin) is shifting the landscape of foreign buyers in the U.S.
For the first time, Chinese have overtaken Canadians as the biggest foreign purchasers of U.S. property by total number of transactions, accounting for 16% of sales to international buyers in the 12 months ending March 2015, according to the National Association of Realtors. Canadians accounted for 14%—down from 23% in 2013.
Real-estate agents say the biggest drop is in the lower end of the market, where Canadians have traditionally bought condos and smaller homes in cities like Honolulu and Orlando as investments. These buyers swooped in when the U.S. housing market crashed and the Canadian dollar was much stronger. Now, with the Canadian dollar trading at about 75 cents U.S., many are selling.
“We are seeing fewer buyers overall but the buyers we are seeing are purchasing at a higher price point,” says Diane Olson, a Scottsdale, Ariz.-based real estate agent with a number of Canadian clients. She just closed on a home sale over $1 million to a Canadian buyer in Scottsdale.
According to real-estate website realtor.com, searches by Canadians for properties in the U.S. on the site over the past year fell for more moderately priced homes and increased for higher priced homes. “There’s a material difference this year compared to last year,” says Realtor.com economist Jonathan Smoke. The company’s data also show a shift in where Canadians are searching. Page views were up for New York, Cambridge, Mass., and Kennebunkport, Maine, and many areas of Hawaii—markets where home prices tend to be high. Page views were down for Detroit, Whitefish, Mont., and Hollywood, Fla., where home prices are generally lower. (News Corp, which owns The Wall Street Journal, also owns realtor.com.)
Other recent buyers are slightly more cautious. Scott Ratushny, chairman and CEO of Calgary-based Cardinal Energy Ltd., bought a Kukio lot in June for $1 million, according to public records. He says he intends to build a home there, but has delayed due to conditions in the oil market and the weak Canadian dollar.
Some Canadians continue to wait to see if the Canadian dollar will strengthen before they buy a home, says David Ivkovic, a Canadian by birth who is a realtor with Keller Williams Realty in Studio City, Calif. “Others just suffer the loss,” he says.
Do you think foreign money coming into the country is a good thing for the US housing economy? Or will it fuel the affordability issue? Let us know your thoughts.
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