Is the Canadian market heading down the road to a crash?
What’s the Canadian real estate market doing? I asked myself this question at the end of last season..about June of this year. Not having a huge number of Canadian buyers in my real estate sales, it was interesting to hear all the agents lamenting about the fleeing of Canadians from our market. We do have a large number of Canadians who purchased their Winter Vacation homes in the desert. Our gorgeous winters, and quick flights to Vancouver certainly helped this market. But also..Canadians LOVE a deal!! When we were in recovery from our own real estate bomb, which ended about 4th quarter of 2011, scores of Canadians and other International buyers and investors, as well as our own Fix-n-flippers, snapped up bargain properties. We have been moving laterally for the past several years in our price/sf. real estate closings, and our market has largely stabilized. An interesting read this morning in the Vancouver Sun, caused me to think about the Canadian real estate market and how it might affect our own Coachella Valley real estate market. Huge Tax Windfall highlights BC’s real estate dependence.
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Our Desert real estate market shifts to a buyers’ Market..
Is this a Buyers Market? Here in the Coachella Valley, which translates to our 9 desert cities, it sure does appear that the tables have turned! The past few seasons have definitely been a Sellers’ Market, but as our season progresses, it appears to be a buyers’ market. Palm Springs on the West side of the Valley is still seeing some strong sales this past quarter, but even there, things are cooling off. Price/sf. has stopped climbing up, up, up, and seems to be moving laterally now. What is causing the change to a buyers’ market in our Real Estate Market?? Kim Kelly’s perspective is that there has been a perfect storm beginning in January of this year. First off, we are in an election year..no matter why, but elections always cause people to shy away from making any decisions they don’t absolutely HAVE to! The plunge in the oil market, the corresponding drop in our stock market, coupled with the rocky Asian Stock Market, and top that off with the decline in the Canadian Dollar!
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Canadians and taxes; be on top of it!
If you’re Canadian and are thinking about buying property in our beautiful winter wonderland here in the desert..or anywhere else USA, read this. Still a great investment strategy for your portfolio, but always super wise to consult your tax professional, get the required docs in Canada and USA so you know what to expect!
Buying in the Palm Springs Valley is a dream for many foreigners. Our warm winters are not to be beat. Golfing, hiking, biking, swimming, shopping, dining outside in the middle of winter, strolling the local art galleries, heading out to cabazon for some killer designer shopping..whatever. There is no reason NOT to buy a winter investment home here in the desert, but be smart. Consult your CPA or tax attorney first!
If you’re feeling shaky? The BIG BOYS are buying investment homes in bulk..that should be some comfort!
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In the Palm Springs area and across the U.S., foreign buyers hunting for safe investments have been flocking to the U.S. housing market, attracted by low the prices here.
International clients accounted for $82.5 billion worth of sales during the 12 months ending in March, according to a survey by the National Association of Realtors . Compare that to the $66.4 billion spent over the same period a year earlier.
These foreign purchasers , mostly from Britain, Canada, China, India and Mexico, made up 55% of all international purchasers. The four states of California, Arizona, Florida and Texas – accounted for 51% of the states in which international buyers purchased homes.
Several factors are driving foreign buyers to purchase in the locations they did, including proximity to their home countries, climate and convenience. It seems the East Coast attracted mostly Europeans buyers while the West Coast attracted mostly Asians. Florida has drawn South Americans, Canadians and Europeans.
There are many happy and proud new Canadian homeowners in our Palm Springs area here. I happen to have new Canadian neighbors across the street from my home. They got a great little Santa Fe with western exposure that’s taking some work to get it back into shape. But, they’re happy with their smoking deal and we’re happy to have nice, friendly neighbors who take pride in their home . . . even though they can only be there six months out of the year. It’s a win-win for everyone.
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who wouldn't want to own in La Quinta???
I am working with Investors, or Investment groups from Australia, the UK, New Zealand, Canada and France..and that’s just in the first quarter of 2012. Our Real Estate market is benefitting from foreign buyers belief that the US is the best place in the world to park their money. These buyers are helping reduce our inventory and get the housing market back in balance again..come on down!
Foreign clients bought 41 billion worth of stateside houses and apartments during teh 12 month period that ended in March of 2011, according to the NAR. Pretty much the same as last year..BUT add in the $41 billion spent by immigrants who moved here within the past two years and people with visas for longer than 6 months and the total is $82 billion..up from $66 billion just a year ago.
Realtor.com is nov visible internationally and can be viewed from practically anywhere in the world..and in 12 languages. Wow! Talk about checking out real estate while in the comfort of your own home. What states are they buying in????
1. Florida- nearly 55% of all international sales from May to November, 2011 were in Florida.
2. California-appprox. 6% in California
3. Nevada-5 % of all foreign sales were here.
4. Arizona-17% of foreign investor sales were in AZ
Why in these states? Because these states have the most standing inventory! The glut of homes in these 4 states is still considerable and therefore the price/sf is the best buy..more for your international money! It’s not ALL about investment. It’s also about buying a home in a country where you want to live..even if it’s only part time.
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Canada price: $500,000. La Quinta price: $175,000
The Canadian housing Market is on fire..that sounds so much like our housing market reports from 2004-2006. The Market here in the Palm Springs Valley was literally “on fire!” Some areas of La Quinta would increase in value up to 22% in a single year. Where else but houses could you get that kind of return on your money?? La Quinta had the huge majority of New Home Sales. Land was cheap and expansive from La Quinta to the further Eastern areas of the Valley, Coachella and Indio. Thousands of homes were built..most were sold. The irony? Those same homes are still being SOLD..just at 50-60% discounts from the high flying days..and there are still many empty houses.
Statistics Canada says the national average price of NEW houses rose .1% in January from just one month earlier. The main contributors? Why, Calgary and Vancouver of course! The increases in these two fantastic cities offset the decreases in Victoria and St. John’s, N.L.
The NEW HOUSING INDEX saw a year over year price increase of 2.4% with the main contributor to this particular advance being Toronto and Oshawa regions in Southern Ontario.
Victoria posted a monthly price decline of .8% as builders reduced prices to stimulate sales in a slower market.
This sounds so familiar to me..I hope the Canadian market can stabilize and not crash. Banks were and are more conservative than ours so perhaps that will protect them? I know one thing..the Canadian market is encouraging our Canadian snowbirds to pick up a winter retreat at bargain basement prices. Those price/sf homes seem even cheaper to them with their own prices continuing to zoom upwards..Come on down!
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If the Banks won’t do it, private investors will! Investors from Canada are coming to the desert in droves, picking up Short Sales or Foreclosures and leasing them..I have several Buyers from both Vancouver and also Calgary that are doing just that. They are also buying homes to live in themselves in our desert paradise, but rentals are a great return on your money. Especially when you buy them for much less than it would cost to replace them..as our housing market is right now.
This investment group is made up of Canadians mostly, but I suspect there are plenty of American Investors in it also..
The La Quinta and Palm Springs area real estate markets in general are on fire..not like the craziness of the 2004-2006 years. This is a reasonable, controlled burn. Houses are being purchased, leased, or lived in with the sane expectations that in 5-10 years, there will be resale profits. Of course, there ARE contractors and groups purchasing “fixers” and re-selling them when done..that is very popular here.
If you don’t live here, probably not best to purchase “flippers”..pretty risky over-seeing your help. Cosmetic fixers..sure. Buy low, lease at a good return/month, and plan to sell at a comfortable profit down the road..
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Canadians have been buying homes in Palm Springs and La Quinta for years now..just more in the past several years. It looks like 2012 will continue to encourage this trend. This article is just an opinion, but it seems it’s the opinion of many different economic advisors and indicators for 2012. The American dollar continues to impress as a wealth protector..which should bode well for continued investment in the Palm Springs, La Quinta real estate market. And..how can you beat these rock bottom prices???
Canadian prediction for 2012..
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La Quinta Date Farm
I’m feeling pretty good because the Palm Springs Valley in general and La Quinta in particular has been rebounding in both sales numbers, a dip in foreclosure home numbers and an actual increase in price/sf in small pockets of developments..yeah!
I try to keep a general feel for the Canadian markets…mostly Vancouver and Calgary real estate because I have so many Canadian friends and clients. This morning this article came online from the Calgary front page with regards to where the Real Estate market is heading in Calgary, Canada for 2012.
Basically saying they are predicting entry level homes to continue to move..entry level in Calgary is approx. $350,000 – $450,000..wow! Here our entry level is about $150,000-$200,000. Anyway, they are also predicting Value increases for homes at approx. 3% in 2012. Isn’t that fantastic? Luxury Homes in Calgary, as with Luxury homes here in La Quinta and the desert area, are moving rapidly. I have seen a huge uptick in sales in the over 1 million price range the last quarter of 2011 and it will continue into 2012.
Calgary has a stable economy, loan rates are low, and builders are pulling permits for single and multiple family projects. We are all intermingled these days and any City that is on the move to real estate recovery is going to affect our own local sales. Go Calgary!!
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