The Snowbirds’ Guide to Real Estate Now
As the U.S. real estate rebounds, Ian MacNeill says snowbirds can still find a deal
How to still find a deal as the U.S. real estate rebounds
REMEMBER GOING to all those dinner parties a couple of years ago where all anybody could talk about were the bargains in U.S. real estate? Fourbedroom homes with pools going for a few hundred thousand, millionplus mansions knocked down like Christmas ornaments in January clearance sales. Notice how you’re not hearing those conversations anymore? For those with capital to invest, it was fun while it lasted, but the land rush is officially over. Thanks to an economic recovery in the U.S. and the winding-down of the sub-prime mortgage lending fiasco, housing prices in the Sunbelt have been steadily rising, especially for buyers with Canadian dollars, which have declined in value by as much as 10 per cent against the greenback.
“Buyers have to start adjusting their expectations,” says Dr. John Tuccillo, chief economist for Florida Realtors. “You’re not going to get that four- bedroom, four-bathroom home with a pool for $200,000 that you could have gotten a few years ago.”
The loss of affordable properties in Florida has been exacerbated by the fact that a lot of available homes were scooped up by bulk buyers who cashed in on the excess inventory in
order to turn them into rental properties, he adds.
But it’s not all bad news. Despite the fact that prices have been climbing, they haven’t returned to the dizzying heights they once occupied; depending on what you are looking for and where, prices are still 10 to 30 per cent below what they were at the peak.
“The party’s never over,” says Tuccillo. “Nowadays, it’s more about knowing where it’s still going on.”
In Florida, bargain-hunters should be setting their sights on communities north of the I-4 corridor, which cuts across the state from Tampa to Daytona Beach. He singles out communities like Cocoa Beach, Titusville, St. Augustine, Panama City and Pensacola. These are less populated areas where prices started lower and have climbed less aggressively since the onset of recovery. “These areas
lack the south’s reputation and recognition, yet they are in a very beautiful part of the state with good weather and more affordable prices.”
On the other side of the continent, Palm Springs realtor Paul Kaplan says the mass migration of Canadians has slowed, and he has had to embark on a process of “re-educating” the ones still looking. “Forget about coming in with offers 20 per cent below asking,” he says. “Those days are gone.” On the good news side, prices are still 10 to 15 per cent below the peak, and what is available still represents a good investment because Palm Springs and the surrounding communities are essentially an international market that will always attract buyers.
“You’re not going to make $50,000 or $100,000 on a two-year flip anymore,” he says. “But homes here still have long-term holding value, and in the meantime you have a property you can use or rent out and use when you do retire.”
In Arizona, prices are also going up, but the silver lining is that so is inventory, says Diane Olson, a transplanted Winnipegger currently selling real estate in the Phoenix area. “There are still good deals because this year there are 26,000 properties on the market whereas at this time last year there were only 13,000,” she says. On the investment side, Olson says the days of expecting annual increases in the 10 to 12 per cent range are over. Or, if you’re buying a home to rent out, a five to seven per cent ROI is still a possibility.
She says Canadians are still in the market despite the rising tide because they still want a piece of the Arizona lifestyle and feel that if they don’t buy now they won’t be able to when they do retire. “Nobody can say what the market is going to be like in one or five years,” she says, “but we can be reasonably certain that it’s going to get cold in Winnipeg.”