Canadian snowbirds still flocking to US home sales
Foreign ownership in American real estate sits at about eight per cent – but that percentage is worth $82 billion US, says the National Association of Realtors.
Homes in many parts of the United States are now worth what they were nearly 10 years ago in 2002, says a report from the association – and it’s this decline that is attracting foreigners, mostly Canadian homebuyers, to snap up a seasonal home at dirt-cheap prices.
From a seller standpoint, the market is “pretty bleak,” says Tom Burk, an associate broker with Sotheby’s Realty International who has a long career of selling real estate on both sides of the 49th parallel. “Given all the bad economic news in Europe and the near political paralysis in the U.S., markets there are struggling to show any kind of consumer confidence.”
In cities where investor interest is high “like Phoenix, Palm Springs or Las Vegas, there is optimism – but in most cities, it’s pretty bleak,” says Burk.
A survey by U.S.-based Credit Sesame of where foreigners are buying, what they are purchasing and how much they are paying shows that the largest group comes from Canada, with Asians and Europeans second and third.
Arizona is the fourth most popular destination for these buyers, trailing Florida, Texas and California.
The largest percentage are buying detached single-family homes for use as a primary residence – and they are paying less than $100,000 each.
Recent reports have claimed that Canadians are the top-ranked outof-state buyers of homes in Arizona, which is still under siege by the flagging economy.
The average Arizona home now sells for about half of what it would have five years ago, says the Federal Housing Finance Agency in the U.S.
The price dropped another 4.6 per cent from the first to second quarter of this year – driving the decline to nearly 15 per cent compared to the same period last year.
The housing market likely won’t turn around until the fundamentals improve, said Marshall Vest, an economist at the Eller College of Management at the University of Arizona in an interview with the Arizona Republic.
But that won’t start until the excess of available homes is absorbed, he said.
“We have enough vacant houses in Arizona to accommodate an entire decade worth of population growth – and that’s if the population were growing,” said Vest.
The recession has changed the way people look at real estate, says Burk.
“It has affected people’s ideas about timing, but it has not affected the basic belief that buying a home and raising a family in that home is fundamental to American values, in many cases,” he says.
Burk’s views are shared by Frank Anton, CEO of the national research firm of Hanley Wood in the U.S.
“We thought people would be soured after watching home values fall, but instead we found the typical American still places high value on home ownership,” says Anton. “We found this holds across all demographic groups and across the country, even in hard-hit places like Arizona and Nevada.”
Credit Suisse Group surveys real estate professionals in several cities in the United States on a monthly basis.
The global financial services company uses 50 as the benchmark for each of nine questions. Above 50 indicates a positive trend, while below 50 means a negative one.
For Phoenix, the report says home prices held steady for October (50 points versus 40 in September), listings remained high (76 points), and buyer traffic inched up to 40 points.
Down the road in Tucson, buyer traffic jumped to 43 points from 27, while prices totalled 43 points (an improvement from 27).
“The economy is poor and unemployment is too high. Nobody wants to buy in this type of environment,” says one realtor.
Las Vegas is also being hit hard by the continuing economic chaos.
“Traffic remains steady on interest from deal-seeking buyers,” says the Credit Suisse report.
But prices remained under pressure with an index of 44, down from a previous 48, while listings were high at an index of 59.
“Low prices and interest rates continue to spur inquiries and activity,” says a Vegas realtor in the survey. “Cash buyers are really driving sales.”
In San Diego, buyer traffic remained very weak with an index of 15, while house prices sat at 25.
“The constant negative news is affecting buyers’ confidence and there is a lot of uncertainty about a potential double-dip (a return of inflation),” says a realtor.
Meanwhile, traffic levels in the San Antonio, Texas, market left a lot to be desired – falling to an index of 14 – while the price index sat at 36.
“Many sellers would like to take advantage of the low interest rates, but we need the buyers to feel confident to keep the ball rolling,” says one real estate professional.
In Miami, Fla., things were looking up, with traffic improving to an index of 39 while priced edged up to 48.
“Cash buyers, both domestic and foreign, are controlling the market,” says a realtor in the Miami area.
Meanwhile, Portland, Ore., which sees buyers from B.C., has seen a strong jump in traffic – almost doubling to an index rating of 25, while prices held steady at 19 points.
Traffic is on the increase, says Debbie Tebbs, broker/ owner of Cascade Sotheby’s International Realty.
“They are doing so because they believe we are at the bottom,” she says.
“There has been a price correction of up to 60 per cent in some areas.”
Source: Marty Hope, Calgary Herald
