TORONTO, Canada – March 9, 2015 – As Canadians head south for spring break to escape the winter chill, U.S. housing affordability remains good despite a stronger U.S. dollar, according to a new outlook released from Toronto, Canada-based BMO Private Bank.
The bank tells its clients that U.S. prices are expected to continue an upward trend in Florida, along with Arizona and other popular Canadians vacation property areas.
“U.S. housing is inexpensive when viewed through the lens of international real estate,” says Jack Ablin, chief investment officer with BMO. “Residential real estate in Florida and Arizona is roughly two-to-three times median incomes. That is about half the valuation of many of America’s trading partners.”
Overall, U.S. house prices have increased 19 percent in the past two years, BMO says – but they’re only about halfway back to their 2006 peak.
The median home price in Florida is $169,400. In comparison, the median home price for major centers in Canada is roughly $230,192 when converted to U.S. currency.
Traditional Canadian Winter destinations remain affordable. Compared to their peaks, prices in Tampa, Miami, Phoenix and Las Vegas have yet to retrace half of their losses.
Sal Guatieri, senior economist, BMO Capital Markets, notes that all the regions, except Miami, were considered highly affordable in 2014 when comparing median prices with median family income; Miami was considered modestly affordable.
“With the American economy and employment gaining strength, home sales and prices should continue to rise,” says Guatieri. “We expect prices to increase about 4 percent this year, and we look for the U.S. greenback to strengthen modestly further against the Canadian dollar in 2015 before weakening next year.”
Florida continues to be a hotspot with Canadians – the largest foreign buyers of Florida housing. More than 500,000 Canadians currently own real estate in Florida. Popular areas include Sarasota-Bradenton-Venice, Orlando-Kissimmee, Miami-Ft. Lauderdale-Palm Beach, Cape Coral-Ft. Myers, Tampa-St. Petersburg and Naples-Marco Island.
Jerry Bevers, regional mortgage manager of BMO Harris Bank in Florida and Arizona, advises that those interested in purchasing U.S. properties should consider financing the new purchase with a financial institution in the U.S. – preferably a Canadian-based bank with branches south of the border. “The process of purchasing a home and acquiring a mortgage in the U.S. is quite different than in Canada.”
BMO offers the following tips for Canadians buyers:
- Consider how much time you’ll spend south of the border.
- Consider how many months of the year you’ll live there, so that your purchase reflects your lifestyle.
- As of June 30, 2014, travelers were required to swipe passports both when they enter and when they depart each country. Canada and the U.S. will share the information. If you exceed 183 days in the U.S. in a year, you become subject to U.S. tax laws.
- What states and neighborhoods fit your needs?
- Since you are responsible for property maintenance, consider how easily you can access your property from your Canadian home throughout the purchasing process and after acquisition.
- Consider flights, airlines, travel time and commuting costs.
- It’s important to understand the differences in mortgage financing and how interest is charged in the U.S.
- Understand the impact of penalties and withholding taxes if you decide to sell your home in the U.S.
- Do you understand the status of the property? For instance, is it labeled as short sale or on foreclosure? The status of the property can have a variety of implications. Be sure to consult an expert before making any buying decisions.
- Is the purchase for investment or lifestyle? This affects where you buy and how you hold the property. Understand the options and what benefits you in the long run.
- If your purchase is for income purposes, keep in mind that renting a property means added responsibility. Research the possibilities of increased utility usage, property management needs and the area’s vacancy rate.
© 2015 Florida Realtors®