Canadians Investing in America, eh?
With news that month over month, home prices in Canada as a whole are up 1.3% and all cities but Montreal posting gains, affordability is declining in our neighbor’s real estate market. This is the fifth straight month in a row with some analysts pointing to this as a strengthening of the Canadian housing sector despite the struggling economy.
“On balance, there was broad-based strength in this report, which is consistent with other measures of the Canadian housing market,” said Ian Pollick, TD Securities’ economics strategist in an interview with Reuters.
With all of these indicators combined, what does this mean for American real estate agents working with Canadian investors? Will the strengthening market cause contraction in American investing or an expansion?
Phoenix Realtor, Jonathan Dalton of RE/MAX Desert Showcase is known internationally for his work with Canadian investors said that he has seen an increase in Canadians investing “because of the rise of the Canadian dollar versus the US dollar, combine that with low prices here with a good exchange rate, and that is what has driven interest. The impact that the rise of house values in Canada has is that people are taking equity out of their homes to purchase with cash here, but I’m not seeing all that much of an impact from affordability except that Canadians looking to invest are coming south rather than to their home markets.”
The report of affordability changes has some braced for a bubble while others note the Canadian central bank wouldn’t likely tighten monetary policy as their response. Homeownership is changing in Canada as does the economy, and the bottom line is that so far, American real estate agents and property sellers are seeing the benefit.
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The average selling price of a Canadian home was up over 20% year-over-year in October which is hard to comprehend given that we’re seeing job losses at a greater rate than the United States. The general buzz about our housing market has gone from “complete bust” in March, to “heating up” around July, to “sizzling hot” by September. Now we’re hearing bubble talk on a daily basis as we’ve just surpassed a new high of $341,000 for a Canadian home.
I think Jonathon is right that the smart real estate money will be shopping in the U.S. but there will be no shortage of would be investors willing to buy in Canada at record level prices. Apparently, a new condo project in Toronto had them lined up deep the day before they opened the sales centre yesterday.
I don’t get it.