Shadow over sunbelt homes cast by loonie
BOCA RATON, FLA. — The epic beach party might not be over yet, but the economic tides are starting to inch a little closer for aspiring Canadian snowbirds.
A pair of concurrent trends over the last year have chipped away at the historic buying power Canadians enjoyed in the American sunbelt since the financial crisis: a 10 per cent decline in the loonie coupled with a roughly 10 per cent rise in U.S. housing prices.
Each percentage point washes away a piece of the bargain.
There are still deals to be had, as sunbelt housing prices haven’t fully recovered from the 2008 crash — but Canadians should be aware that they’re entering a much more competitive market.
To illustrate that point, one longtime real-estate agent points at a Boca Raton highrise.
“If you ask me about that apartment (and say), ‘I’d like a twobedroom,’ what you’re asking for might be sold,” says Sandy Yacker, motioning toward a building as she drives up Florida’s coastal highway.
“I’d have to show you another building. We don’t have any inventory. The inventory was plentiful two years ago — now there might not be any in that building.”
Yacker’s seen a lot in her 74 years, nearly all of it spent in Florida and much of it spent working as a real-estate agent.
She remembers seeing the elegant clothes along Miami’s South Beach, in a distant era when women wore gowns and men wore suits instead of today’s dental-floss fashions along Ocean Drive.
But she’s never seen anything like 2008. In her own condo complex, one-bedroom villas that had gone for $280,000 US were suddenly being panic-sold at $110,000 by frail seniors who had to sell in a hurry because they needed to move into specialized homes.
She says those units are now going for about $170,000, after a bounce last year.
“It’s no question ... It was disturbing if you were trying to sell if, God forbid, an emergency came up — if a person got sick and couldn’t stay in their home,”
“I’D SAY GROWTH (IS) PAUSING, BUT I DON’T THINK WE’RE GOING TO SEE THE LEVEL OF CANADIAN SPENDING AND INVOLVEMENT IN THE REAL-ESTATE MARKET GO BACK TO WHERE IT WAS.”
DEREK BURLETON
Yacker said.
“But it’s started to rise in price.”
That analysis is confirmed in numbers from the U.S. National Association of Realtors for 2013. They say U.S. sales activity increased by 9.1 per cent, for their best year since 2006. The median home price shot up 11.5 per cent, the biggest increase since 2005.
Meanwhile, though, U.S. home purchases by foreigners edged backward in 2012-13.
International-purchase numbers for the last calendar year aren’t out yet, but through March 2013 the total was $68.2 billion — still high, historically, but much lower than the $82.5 billion from 2011-12.
Canadians are the biggest international buyers of those U.S. homes, comprising one-quarter of foreign purchases. And Florida is their No. 1 choice — with 39 per cent of Canadian purchases occurring there.
One economist predicted an impact from the currency fluctuation, albeit a limited one.
Statistics crunched by the TD Bank for The Canadian Press suggest a 10-cent decline in the loonie likely means 250,000 fewer visitors per year to Florida, and a decrease in spending of about 0.7 per cent of the state’s GDP (or somewhere between $250 million and $400 million).
“I’d say growth (is) pausing, but I don’t think we’re going to see the level of Canadian spending and involvement in the real-estate market go back to where it was five or 10 years ago (before the crash),” said Derek Burleton, the vice-president and deputy chief economist of the TD Bank Financial Group.
He said the currency fluctuation will be felt far more in the Northern U.S., in areas that have come to benefit from Canadian crossborder shoppers.
As for the sunbelt, he said, economics become a secondary factor for many buying sunbelt real estate.
People are drawn there for reasons other than cost savings and, with baby boomers retiring, he predicted Canadians will keep visiting and snapping up property to be close to the beach and the sunshine.
Bob Slack, a retired school principal from Ontario who has had a home near Lakeland, Fla., for 16 years, concurred with that assessment.
Slack has witnessed other economic shifts during his time down south.
He said people might spend a little less on a house and meals in restaurants.
They also might spend a little less time on the golf course. But they’ll mostly keep coming. “There are many ways snowbirds cope with a fluctuating dollar,” Slack said.
“People just adapt.”