Looking back, Canadian businessman Tom Simons wishes he had waited to buy his $1 million-plus vacation home in Scottsdale.
The Canadian dollar had been steadily rising in value against the U.S. dollar and was worth roughly 92 U.S. cents when he purchased the property in early summer.
Since then, the currencies have undergone further realignment, with the Canadian dollar now the stronger. It climbed to $1.07 U.S. on Friday.
The dramatic flip-flop means Canadians now have more buying power here than in decades, and a growing number are seizing the opportunity to dive into Arizona real estate.
Some are looking for investment properties. Others just want vacation homes. Many pay cash.
“This is a phenomenal time,” Scottsdale real estate agent John Wake said. “The exchange rate hasn’t been this low since 1976, so these (homes) are really big bargains for them.”
It’s like a faucet turned on about a month ago and calls from Canadians started flowing in, Wake said.
'SNOW ALL WINTER’
Arizona and Canada have long had a strong connection.
The number of Canadian visitors to the state has nearly doubled since 2002 to roughly 496.000 last year, according to the Canada Arizona Business Council.
Arizona’s weather is a big draw, said Simons, CEO of a public energy services company.
“The change from home is stark,” he said.
For the past decade, he’s come to Arizona to play golf with friends and, most recently, to spend vacations with his family. They eat meals outside, ride bikes and swim.
In Canada, anywhere you go “you’re either going to get rain all winter or snow all winter,” said Wendy Whiting, president of Global Mortgage Corp. of Vancouver, British Columbia.
But a number of other factors, beyond the current exchange rates, have contributed to the surge of interest in Arizona real estate.
The Canadian real estate market has been on fire for some time now, Whiting said. In Vancouver, it’s tough to find a house in the $600,000-$700,000 range. Most are closer to $1 million, she said.
“Everybody has equity in their home, and the baby boomers are becoming more prevalent,” she said.
They are inheriting money from their parents, and it’s now possible to work from any place in the world, Whiting added.
Buying in Arizona is “easier than it’s ever been,” she said. “Flights are cheap. The dollar is strong. We all have money.”
THE RIGHT PRICE
Simons’ real estate agent, Don Matheson, said he has sold 10 or 15 homes to Canadians in the past six months and has 10 to 12 additional prospects coming to Arizona.
“They’re buying at all price levels,” Matheson said.
He’s had one client looking for a condominium on a golf course in the $200,000 price area. Another Toronto resident recently called, looking for a house in the $600,000-to-$1 million range.
Many buyers have been young families with children who want homes with pools. There have been CEOs and business owners. They’ve come from various industries, such as steel fabrication, restaurants, commercial real estate and oil, Matheson said.
Some in Canada’s Alberta province have been awash with wealth from the oil boom there.
Matheson said he’s been getting roughly three calls a day from Canadians, and “it seems to be accelerating.”
Mark Dziedzic’s phone has also been ringing off the hook.
The mortgage professional, who has offices in Phoenix and Toronto, said parity between the two dollars has brought Arizona real estate back to the forefront for Canadians who were already thinking about buying property.
Many don’t think the current strength of the Canadian dollar is a sustainable thing, so “now’s the time to do it,” Dziedzic said.
Dziedzic has been hosting seminars on how to buy Arizona real estate throughout Canada. He has eight events planned in November alone. Two seminars recently held in Toronto sold out, with about 70 people attending each.
Dziedzic is also forming partnerships with local builders interested in tapping the Canadian market.
“They realize the opportunity as well,” he said.
Other Arizona real estate professionals are placing ads in Canadian newspapers and networking with their Canadian counterparts.
'THERE'S A HOPE’
Real estate experts say it’s unclear what impact increased interest from Canadian buyers might have on the languishing local housing market.
Robyn Robertson with Suburban Mortgage in Scottsdale said she thinks this could be just the start of what’s to come. The two dollars have hit parity just recently, Robertson said.
“The good news is that foreign investment (whether it’s Canadian, Japanese or French) could help stabilize the Arizona real estate market,” Arizona State University finance and real estate professor Anthony Sanders wrote in an e-mail.
But foreign investment comes with a caveat, Sanders said. In the 1980s, the Japanese invested heavily in U.S. commercial real estate, based on beneficial currency and tax treatment, Sanders said. When that advantage disappeared, Japanese investors dumped billions of dollars’ worth of real estate, he said.
Canadians buying up Arizona homes aren’t going to save the market, but it should help, Scottsdale real estate agent John Wake said.
“There’s a hope riding on Canadian business,” he said. “We’ll see what happens.”
By the numbers
322,700 - The median price, in dollars, of U.S. homes purchased by Canadians.
68 - The percentage of Canadian home buyers who purchased U.S. homes for vacation use.
47 - The percentage of Canadian buyers who purchased U.S. homes with cash.
11 - The percentage of all international U.S. home buyers who came from Canada.
6 - The percentage of all international home-buying transactions Arizona represented.
SOURCE: National Association of Realtors Profile of International Home Buying Activity in 2006-2007