November 14, 2012
A Place in the Sun
B.C. residents with a desire to move south for the winter are finding it is still possible to find property bargains.
There’s an old adage often voiced by every salesperson worthy of their commission that clings to the notion “there’s never been a better time to buy.” Well-worn this saying may be, but when it comes to investing in property south of the border, it’s nothing less than the truth.
From the time the U.S. residential mortgage market slumped in 2007, property prices dropped substantially – and in some regions, dramatically. The debacle was closely observed by homebuyers and investors north of the border, who quickly realized there were bargains to be found. Large numbers of Canadians bought homes or recreational properties down there and reports now indicate that they are the most prolific among all foreign buyers in the U.S. real estate market, ahead of those in China and Mexico, with more than $82-billion spent in the last year for which figures are available.
Areas hardest hit by the housing meltdown included many locales of particular interest to British Columbians seeking vacation or retirement properties south of the border and that much-dreamed-about “place in the sun.” These include Arizona, California and Nevada – states that saw some of the most significant price drops. A typical Phoenix property which may have peaked at $270,000 during the 2006 boom could well have plunged to under $100,000 during the worst of the slump in 2010. But prices have rebounded and that home may now have risen to $130,000 or so – still a bargain.
U.S. home prices dropped often to below replacement value and although the market has revived a little (up two per cent this year in one 20-city survey) there are still countless great buys to be found. Prices have probably bottomed out though, so anyone with plans for investing in U.S. residential property should act fast, as the window of opportunity may be closing.
Naturally enough, there are pitfalls and buyers are advised to get all the professional assistance available before taking the plunge into the U.S. market. It’s essential for would-be Canadian buyers to get help from real estate professionals who really know the U.S. market, along with expert legal and accounting aid. Between them, they should be able to steer a buyer through the various taxation, residency and healthcare issues likely to be encountered. Buying property in the U.S. is not a step buyers should take on their own.
British Columbians we spoke to who own property in the U.S. were almost universally pleased with their decision to buy and the most common response was “the best thing we ever did.” In some cases, being able to spend winters in a mild climate away from the rain and cold were life-prolonging factors, especially to retirees. Some who bought homes many years ago did not regret the housing market meltdown because the home was bought for recreation or retirement, not as a way of making a quick profit. Golf and other outdoor sports are often key attractions. Arizona and Southern California have numerous golf courses for every level of play and many are home to PGA tournaments featuring the world’s best players – another draw in these regions for golf fans. Even for non-golfers, being part of the gallery for a PGA event played in the warmth of the February desert sun certainly beats a chilly and rainy day on the B.C. coast.
It’s not recorded which are the most popular locales for Canadians to invest in, but obviously Phoenix, Scottsdale, Tucson and other areas of Arizona are probably close to the top of the list, as is southern California and the desert cities from Palm Springs to Indio. Las Vegas is a big attraction, along with one or two “hidden gems” like Borrego Springs and the Temecula Valley wine-growing area, both in southern California. Florida is popular with eastern Canadians, as might be expected, though it’s never been a top choice for westerners.
One couple we spoke with who work together in B.C. real estate purchased several condos in Las Vegas for both vacation visits and rental income. They’d been regular Vegas visitors for years and the substantial drop in property prices there enabled them to fulfil their ownership dream. Closer to the Lower Mainland, interest often centres on ski areas like Washington’s Mount Baker, Crystal Mountain and Stevens Pass.
Resorts like these have long been a draw for B.C. buyers attracted to easy-to-reach northwest Washington and for sailing enthusiasts, the San Juan Islands are a great base for some of the finest cruising in North America. One common response from Canadian owners of U.S. homes was to point out how neighbourly and welcoming people were in the areas in which they lived. Opportunities for great real estate buys certainly abound in the U.S., but people with property ownership goals south of the border should plan their investment carefully, do their homework and make use of the best professional advice they can find.