Five Reasons Why Canadians Are Snapping Up U.S. Real Estate - Walletpop Canada
Canadians have long had an interest in U.S. real estate, especially in sunny vacation spots in Florida and Arizona. It is rare though for such a great window of opportunity to open as it has now.
Whether you are looking for a vacation home or an investment, here are five reasons why now is a good time to buy Stateside:
More Americans Are Renting. The housing crash in the U.S. combined with the financial crisis and recession have caused a great number of people to give up the "American dream" of owning a home. According to newspaper USA Today, 72% of Americans surveyed in August said home ownership was part of their dream, down from 77% at the beginning of the year. Greater demand for rental property has helped push rental returns higher in some U.S. cities, particularly for homes with three or more bedrooms. You can search historical rental rates at Rentbits.com.
The Canadian Dollar Is Strong. The loonie has been hovering at just below parity with the greenback with the potential to break higher. The strength of the loonie is above its historical average over the past 10 years of about US78 cents. The strength against the greenback makes purchasing U.S.-dollar denominated goods cheaper compared to most other times in the past, and most likely the future too.
House Prices Are Low And Affordable. The house price declines that began back in 2006 are still affecting the U.S. market, with values down 28% since that time. Some analysts don't expect house prices on a national level to begin to rise for about three years. However, house prices differ by city and some popular markets have already seen prices stabilize. Even so, it will likely be a while before U.S. house prices rise, therefore investors should be looking at the long-term.
Mortgage Rates Are At Historical Lows. U.S. mortgage rates are at a record low. At present there are 30-year fixed rate mortgages on the market for as low as 3.8%. Low rates can save a home buyer thousands of dollars over the long-term.
Good Potential For Future Profits. The combination of the above average Canadian dollar, low U.S. house prices and rent appreciation can mean some big profits for buyers in the future. Investors should focus on the long-term because it will take some time for house prices to rise. Once the U.S. market begins to improve, the Canadian dollar will likely move back towards it's historical average, meaning gains for those invested in U.S. assets.
The U.S. housing market varies dramatically by city, so thoroughly research your area of interest before making a decision. According to USA Today, it is cheaper to rent than buy in New York, Seattle, Fort Worth, Omaha and Sacramento. On the other hand, it is cheaper to buy than rent in Arlington (Texas), Fresno, Miami, Mesa (Arizona) and Phoenix. This is based on multiplying rents by 12 months and comparing the cost to a year's worth of mortgage repayments.
Buying property in the U.S. as a foreigner is a little more complicated than it is for locals. For instance, lenders generally require a higher deposit. There are also tax implications. For more on this, look out for my upcoming blog on How To Buy Property Overseas.
And every investor thinking of buying U.S. real estate should keep a watchful eye on developments in the mounting foreclosure scandal prompting headlines right now south of the border. It may be a buyers' market, but those buyers need to be more vigilant than ever.
For more information please see my website at North Idaho Property
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