Canadians cut back on U.S. home purchases
By JULIE SCHMIT
By JULIE SCHMIT
Canadians — who recently ranked as the No. 1 foreign buyers of U.S. homes — have curtailed purchases in recent weeks because of a rapid decline in the strength of the Canadian dollar, Realtors in both countries say.
Canadians accounted for 23.6 percent of foreign buyers of U.S. homes in the 12 months ending in May — double the percentage of the prior year — said a recent report by the National Association of Realtors.
The Canadians were driven by the strength of their dollar. It reached parity with the U.S. dollar for the first time in 30 years in September 2007 and remained above or near the even mark until last summer. But since Oct. 1, it's down 11 percent and is now worth 86 cents, nearing 2005 levels. That's reduced the buying power of Canadians and made U.S. homes less appealing to them despite much lower prices brought by the United States' foreclosure crisis.
At the same time, fewer U.S. lenders are doing home loans for foreign buyers, and some are requiring heftier down payments.
"There's definitely been a slowdown," said Re/Max Realtor Trevor Matheson in Edmonton, Alberta. "For a while, there was a big influx of Canadians into the U.S. for foreclosed properties."
Florida landed a third of Canadian purchases for the 12 months ended in May, followed by Arizona at 27 percent, the NAR said.
Phoenix Realtor Mark Dziedzic said his Canadian clientele has fallen 30 percent in the past several weeks. He expects it to bounce back once buyers digest the events of the past month and look again at depressed U.S. home prices. "We had a full year of a flurry of buyers. A bit of this panic is short term."
Nataly Lessard, Realtor with Coldwell Banker in Fort Lauderdale, specializes in Canadian clients. While fewer are looking, she said, more are think it's time to buy, given signs that prices in the region may have bottomed.
Foreign buyers are estimated to account for only a tiny percentage of U.S. home sales. But they're a bigger factor in vacation hot spots, such as Florida, Arizona and California. The NAR, for instance, found that foreign buyers accounted for 7.3 percent of Florida home sales in spring 2007.
The NAR's most recent report said foreign buying had decreased from the previous year. But Canadians "made a huge leap" because of the strength of their currency, said Lawrence Yun, NAR senior vice president. That currency has since suffered as oil prices plunged and the economic malaise that gripped the U.S. spread worldwide.
The NAR report notes that Canadians generally pay cash — almost 70 percent versus 43 percent for foreign buyers overall. Even so, tighter lending standards are derailing some buyers, said Diane Watson of Realty Executives in Scottsdale, Ariz.