Smart Canadians are getting fantastic home deals in the Palm Springs and Desert Cities Area
For the past several years, Canadians have been flocking to the Palm Springs area to buy second homes or winter getaways.
2007 was the peak buying year for Canadian buyers because the exchange rate was the most favorable for Canadians in almost 50 years.
On July 11, 2007 the Canadian dollar peaked at $1.1030 for $1.00 US. Stated another way, $1 US dollar was only worth $.9066 Canadian dollars. A home selling for $500,000 US could be purchased for $453,309 Canadian. Not a bad deal. A very handy website to check on exchange rates is http://bankofcanada.ca.
In addition to the exchange rate working in favor of the Canadians, several other key factors also worked in their favor:
- Westjet added several convenient and affordable airfares from several Canadian cities to Palm Springs International Airport.
- The Alberta area was enjoying huge oil profits.
- Canadian home and land values were appreciating rapidly throughout the Canadian provinces.
- Palm Springs, which boasts over 300 sunny days per year, is a much desired Winter home for many Canadians escaping the cold, snowy winters.
As a result, savvy Canadian buyers snapped up properties all over the desert.
There has been a lot of confusion lately regarding whether or not Canadians can still get mortgages for properties in the United States. The answer is YES, they can. Although many Canadians pay cash for their desert homes, it is always good to know your options.
According to Ryan Gray at Cal Metro Mortgage, loans are available for:
- Second homes and Vacation homes ONLY
- Maximum loan amount is $500,000 US
- Minimum 30% down payment
- 6.500% interest rate (10 yr 10/15 year repay)
- Full doc ONLY (2 yrs tax returns and 2 months bank statements required)
- No prepayment penalty
Although the exchange rate today is about $.8666 Canadian to $1 US, the prices of homes in the desert area since 2007 have dropped considerably and in most cases make today a better time to buy properties in the Desert than in 2007. Let’s go back to our earlier example of a $500,000 home in the desert which could have been purchased in 2007 for $453,309 Canadian. That same home could easily have been reduced in price to $400,000 or less since 2007. In that case, the $400,000 price tag would cost a Canadian buyer $461,573 which on the surface is pretty close to the same price he/she would have paid 2 years ago. It is very likely the final negotiated price of the home could be well below the 2007 price. The main point I want to make is that there are many factors that go into how much a person pays for a home. I think we are in a perfect storm right now. The inventory levels of homes in all price ranges is still plentiful, but decreasing at a rapid pace. Interest rates in the Unites States are still at or near historical lows which is bringing buyers back into the market and creating more competition. Many LEADING indicators are pointing to a recovering economy. In fact many top economists are suggesting we are either already out of the recession or exiting it quicker than forecast just a few months ago. Here is a quick video from ABC News, Good Morning America on May 12, 2009 with Liz Ann Sonders, Chief Economist for Charles Schwab and Co., where she says the recession is over.
I hope this blog article has shed some perspective on the buying opportunities in the desert and the home loans available for Canadian buyers. For those Canadian buyers who are waiting for the exchange rate to improve, keep in mind home prices seem to be stabilizing or bouncing along the bottom and many buyers are coming back into the market. Sales are way up form last year. Future articles will focus on the actual statistics in this ever improving real estate market.
Please contact me with any questions or if you would like me to put you in touch with an outstanding lending company for any of your home loan questions or needs.