Photo courtesy of Fulton Homes
The greater Phoenix real estate market has begin to show signs of improvement after several down years in the wake of the 2009 financial crisis. An improvement in the labour market and unemployment, coupled with the boom of oil production throughout the United States has left many of the markets that were deeply affected showing signs of recovery in real estate property values.
So does this mean an end to the influx in capital from investors north of the border in Canada looking for properties south of the border? In regions such as California, Nevada, cities across the greater Phoenix region, and into Florida, buyers found the strength of the Canadian dollar, and value on American home prices to be too good to pass up. This led to countless deals on foreclosed and short sale homes as many looked for investments to hold and sell, or to vacation to in the frigid Canadian winters.
A Noticeable Decline In Real Estate Purchasing
“There was once a point that many could get into the market and find condos and small homes from $40-$50,000, and that seems to now have passed. Many of these once troubled markets have begun to show signs of recovery and values have bounced back, making the price less attractive to get into the market.”
In real estate markets like Vancouver, BC, the average price for a single family home is in the ranks of Tokyo, Hong Kong, London and New York city, making for one of the least affordable North American markets.
“On paper, there is certainly lots of appeal in buying a property south of the border within only a few hours flight away, however, the US market doesn’t appeal to most of my clients as it maybe once had” notes Mugridge.
Why Are There Less “Snowbird” Home Buyers Now?
So what caused this shift if prices are still significantly below that of a typical Canadian market?
- Tax regulations make it difficult to navigate clearly. Coupled with estate planning, it can be challenging to confidently sink significant amounts of capital into a foreign market. Often it means having to find a new accountant familiar with the US tax system, which may not be easy for most to find.
- Health care costs. The typical snowbird purchasing a secondary property is over the age of 50. Health insurance abroad from home markets can be quite expensive, and is a cost that must be considered if one decides to make frequent trips. Speaking with one Canadian who had property in a Scottsdale RV Park, he noted he had to return home to step foot in Canada every few months to get a better deal on travel medical insurance. Not exactly a practical vacation!
- Maintenance costs. Managing plumbing, heating, air conditioning, landscaping, and the rest of the upkeep around one home is hard enough. Doubling it to a second home doesn’t become any easier! Foreign investors need to be cautious about working on their own properties as well, as immigration rules have heavy restrictions on what a foreigner can and cannot do while in the country.
- Travel time and cost. As more low-cost carriers have begun entering many markets, driving down most airfare prices, air travel still remains a significant expense for many travellers. Furthermore, as owners get older and mobility issues begin setting in, it can become all the more challenging to endure the flights that you maybe once had as a young individual!
Although it may be easy for a buyer to browse Maple Ridge MLS listings and be envious of a US Real Estate market like greater Phoenix, there are certainly more things to be concerned with than the cost of purchasing when it comes to buying that next property.