Loonie-ness

Posted today over at MSNBC – sometimes viewed as a source of “news”, I found this tidbit. It looks like we’re gonna get bailed out by the Canucks! Phew

As loonie surges, Canadians snap up US homes
Snowbirds bring checkbooks to grab properties at deep discount

CHANDLER, Ariz. – Two hours after his flight landed in Phoenix, Calgary resident Doug Farley already was cruising the city’s vast stuccoed suburbs in search of the one attraction Canadians cannot seem to get enough of these days: cheap homes.

There are thousands of them here: almost new, unoccupied and dropping in value. The mortgage meltdown, combined with a surging Canadian currency, has Farley — and many of his countrymen — dreaming of winter golf on grass that’s always green.

“My dollar’s the same as your dollar, finally,” Farley said, grinning as he peered through a pool fence at a sparsely populated condominium complex in Chandler, a Phoenix suburb
For moderate-income Canadians like Farley, the race is on to take advantage of the “loonie,” which in September reached parity with the U.S. dollar for the first time since 1976. Many are combing the Internet for anxious American home sellers and looking with an investor’s eye at the condos they rented while on vacation in sunbelt states.

and guess what.. they’re nice too, cuz they’re Canadians! (note, I am not making fun of Canadians here. Just the writer)

“Fifteen of my friends are on buying trips down here, and we’re all cheap,” Sirockman said. He brought his family to Scottsdale this month while he submitted a lowball all-cash offer for a three-bedroom home.

“I don’t want to take advantage of a guy who’s having trouble in the market and is losing his shorts,” Sirockman said. “But I have no problem with a guy from California who bought on spec and has five houses in Arizona and never lived in them.”

The reporter must have been working on this story for, oh say a month or so. Might not have noticed what’s been going on with the loonie the past couple of weeks. If they’re going to save us, they better hurry!

US Dollar to Canadian Dollar

loonie.png

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25 comments:

  1. 1
    Roger says:

    My sole opportunity to make a profit on my stash of Canadian money has evaporated? Dang.

    How come we don’t hear about these land rushes in the other direction? When the Canadian dollar falls, do US folks charter jets to Alberta to buy cheap Canadian homes? If the Yen falls does Tokyo teem with ganjin looking for housing bargains?

  2. 2
    MacAttack says:

    Loonie indeed!

  3. 3
    EconE says:

    I have a friend that tells me that the Canadians will flock to his area (Bellingham/Ferndale) and the Seattle area in general with their currently weakening dollar. I’m sure that the condo flippers were hoping the same thing.

    My take on it is this…

    1. Why would a Canadian want to move from a Cold, Dark (in the winter) northern climate to Seattle? Sure…it’s beautiful here, but it’s beautiful up there in Vancouver also isn’t it? I could see them scooping up some sort of cheap deals off of builders etc. down in Arizona because after all they are not only the “poster child” of the housing bubble (one of many) but the one thing that they are all after is WARMTH (imho).

    I’ve been following the exchange rate vs. a condo in my complex that’s for sale.

    http://redfin.com/stingray/do/printable-listing?listing-id=1244598

    Back in the beginning of the year the condo was originally listed at $1,675,000 and has been on Redfin for 48 days now at $1,138,000.

    Lets look at this from a Canadians POV.

    When it was originally listed, the price in Canadian $’s would have been C$1,976,500. ($1 US = @$1.18 Canadian.)

    Had that same Canadian decided to purchase it in November at the low of C1$=@.92 USD it would have only cost C$1,046,960.

    Yet it still sits on the market at @C$1,150,000 at the current exchange rate.

    Why? Ummmm….probably because they know that we’ve got one hell of a bubble here in Seattle also. More Million $+ homes and condos for sale per Capita in King County than in LA county.

    Would any of you care to do an absorption rate for that level of homes? It’s a pretty damn large chunk of the market. I think that there has to be at least a 10 year inventory of 1M+ condos in Seattle alone including the ones that have been “pulled” off the MLS for whatever reason.

    It’s a cancer that’s gonna spread from the bottom up and the top down from what I’m seeing.

  4. 4
    stephen says:

    When we were looking it was obvious that a huge number of sellers had collectively lost their freaking minds and had to find a buyer that had as well. I would not be surprised at all to see these absurdly priced homes and condos lose 50-70% of their value. They were never worth it in the first place bubble or no bubble and that party is over.

  5. 5
    Ray Pepper says:

    Agreed. I would NOT bank that Canadian dough here in the NW. They will spend, as many of us will, in the Southwest. As I advise many here in Tacoma there is no RUSH to get to AZ. They have years of inventory to move! The incentives will be rolling out next year. In Reno you can get a nice new Toyota Corolla for buying a new 220k home. Or how about a BMW for a 450k home. Make the offer, they will listen! Canadian dough or American bring it on!

    Ray Pepper
    Broker
    http://www.500Realty.net

  6. 6
    softwarengineer says:

    AS BAD AS AMERICAN INCOMES ARE TO AFFORD AMERICAN HOMES, CANADIANS MAKE EVEN LESS

    Their GDP per capita is about 20% less than ours. that says it all.

  7. 7
    Runs With Scissors says:

    I continued to be fascinated with the RE industry that grasps for Interest Rates, Canadian Currency Strenght, and Market Job/Economic Growth as the newest “saviour” of a overvalued commodity market

    It’s time to acknowlege that the RE Market as a whole, just like the NASDAQ, has reached a point where prices far outstrip true performance or value, and that for the next few years homes should be considered places to live and not a means of income or an investment opportunity.

  8. 8
    vomitingdog says:

    I’m Canadian and I live in Vancouver. But does the writer think that being Canadian automatically make us dumb? (Don’t answer that).

    I would dealy love to buy a condo in downtown Seattle overlooking the water. But like everyone else, I’m waiting until prices drop a lot more.

  9. 9
    col says:

    Oh please. A) This bubble is international. B) The economic slowdown here = slowdown there. C) What vomitingdog said.

  10. 10
    Affluent Bitter Renter says:

    Vomitingdog,

    A little known secret codicil to the North American Free Trade Act requires Canadians to buy houses in the United States when the US real estate market is tanking. You are particularly required to buy in Florida, which has rigged its property tax system to discriminate against Canadians (and other snowbirds).

    At a minimum, you are required to contact at least one American media outlet to say that you are thinking of buying in the US, so that real estate agents can use that in their propaganda.

  11. 11
    The Bruce says:

    Having relocated here from AZ this year, I can definitely confirm the ‘years of inventory’ accrued – more like, ‘a decade of inventory’. Places like Queen Creek in the east and Surprise in the west that were new century’s ‘boomtowns’ are now ghost towns and dirt, dirt cheap. 2500 sq’ and a pool for $230k cheap. Of course, since infrastructure never caught up to development BEFORE the boom, you’re looking at a decade before it actually DOES catch up.

  12. 12
    Newcomer says:

    The thing is, we Canadians have long relied on you Americans as the explanation for the major disconnect between our incomes and our RE prices. According to what I read in the papers, it’s you guys coming up here and buying stuff that guarantees that Vancouver house prices will never fall. Of course, all that appreciation has naturally made us rich enough to do things like go shopping for houses south of the border. I hope it helps keep you guys rich so that you can keep buying our condos. I just have one favor to ask. Please don’t mention what is happening to your RE prices when you are visiting. After all, we’d all be in trouble if people started doubting that this could go on for ever.

  13. 13
    economist says:

    Why would a Canadian want to move from a Cold, Dark (in the winter) northern climate to Seattle?

    Well that’s not the real question – which is how many Canadians can move to the US, and the answer is, not many. If more could, Whatcom would have become a suburb of Vancouver long ago.

    “I don’t want to take advantage of a guy who’s having trouble in the market and is losing his shorts,” Sirockman said. “But I have no problem with a guy from California who bought on spec and has five houses in Arizona and never lived in them.”

    Don’t you worry, Jason. In a falling market, it’s really the seller who is taking advantage of the buyer, whether the seller is “losing his shorts” or not.

  14. 14
    USdollars says:

    not exactly on topic, but a worthwhile read on the mortgage meltdown

    http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/09/IN5BTNJ2V.DTL

  15. 15
    Buceri says:

    At this price levels, Canadians can buy second homes? Really?? No matter how cheap the US peso gets; how much do you make up there?
    I must be very poor…or stupid.

  16. 16
    betamax says:

    A few Canadians are taking ‘equity’ out of their homes (i.e. accumulating debt) to buy ‘RE investments’ (i.e. depreciating assets) in Washington, but it won’t last.

    We’re where Washington investors were a few months ago, seeing the catastrophe elsewhere but smugly concluding that it hasn’t hit us yet so therefore it won’t.

  17. 17
    rose-colored-coolaid says:

    Frankly, I haven’t run into that many Canadian’s who are eager to move to the USA. I’ve known some who come here for work, but they don’t seem any more thrilled about living here than they do about living in Canada. Many others seem to hold a slightly negative opinion about our country.

    This is all anecdotal, but how many Millions/Thousands/Hundreds/Dozens of people from north are looking for a chance to immigrate here?

  18. 18
    vomitingdog says:

    How much of an impact can a small percentage of 30 million Canadians have on the falling real estate markets of 300 million Americans?

    I can tell you that most people who own in Vancouver, are mortgage strapped. Of the other Canadians who live in much colder cities, the small percentage who own 2nd homes want them in warmer winter climates.

    I don’t doubt that some Vancouverites are buying in Semiamoo and Bellingham but that’s pretty far from Seattle.

    I’d like to have a little whine, however, that prices in Vancouver are far from falling. They are, if anything, still going up to the dismay of all. And our Bernake just said that our housing market is immune from the subprime meltdown in the States. Plus interest rate cuts are coming. Pity us.

  19. 19
    Affluent Bitter Renter says:

    “I’d like to have a little whine, however, that prices in Vancouver are far from falling. They are, if anything, still going up to the dismay of all. And our Bernake just said that our housing market is immune from the subprime meltdown in the States. Plus interest rate cuts are coming. Pity us.”

    Give it time – the collapse of the worldwide asset bubble will not spare Vancouver.

  20. 20
    Buceri says:

    Come on people!!!! Seriously; if you lived in Canada; you really think of Seattle as South???? Please!!! A second home is a bragging statement; for most people that is a home in a hot sunny spot!! Arizona, South California, or Florida. And Florida was dirt cheap until 2003 (and still much cheaper than the rest today), irrelevant to the value of the currencies.

  21. 21
    WestSideBilly says:

    vomitingdog said,

    I’m Canadian and I live in Vancouver. But does the writer think that being Canadian automatically make us dumb? (Don’t answer that).

    Actually, the writer knows most Americans are morons who believe whatever the MSM is reporting.

  22. 22
    what goes up comes down says:

    Well, it has finally made the times — for all of you who think Boeing and MS will save the RE market in Seattle — have a read.

    http://seattletimes.nwsource.com/html/boeingaerospace/2004077616_787jobs17.html

    Hmmm, not as many jobs created as thought, do ya think this might just be the wave of the future? Many of the jobs created were outsourced at lower wages — hmmm. Maybe, the cheerleaders will get a clue.

    Come spring time watch out because the shock will be huge and severe.

  23. 23
    Dave says:

    Hi!

    As a transplanted Canadian I thought I would comment on the “Canadians moving south” meme.

    A few observations of my own. People who buy second homes in the States do so primarlily to get away from the cold. They don’t buy in Seattle (or anywhere else that isn’t warm) unless they have a vested business reason to. People are not going to buy vacation homes in Whatcom or even Seattle. End of story.

    Retired people have an impetus not to leave Canada and it has to do with medical treatment. With universal health care in Canada – health care that doesn’t work in the states – there is an even greater impetus to avoid moving to the states. Strike two. My own parents would be bankrupt by now with medical bills if they lived in the US. In Canada it doesn’t touch their income.

    Strike Three – if you maintain your residency in Canada you get to pay two sets of full income taxes. That is a big hit most people can’t afford. It is much better to visits/rent than to own.

    Please know that there are some outliers so take anything I say with a grain of salt.

    I moved to the US because of the proliferation of overqualified people in Canada. Nothing like having a PhD and ending up working retail (I kid you not). Too many graduate degrees for too few jobs.

    Things about Canada bug me – but I always got the feeling that the motivation behind the programs was positive even if the implementation didn’t work out. It is a place where the value of people is greater and this is seen in programs like Universla Health Care. Sure – the implementation sucks (and is only going to get worse) but it isn’t as cut throat as the staes.

    I always put it as “it is better to be in the states if you have money, and be in Canada if you don’t”. I think it holds up pretty well.

    Dave

  24. 24
    TJ_98370 says:

    ….My own parents would be bankrupt by now with medical bills if they lived in the US. In Canada it doesn’t touch their income….
    .

    Dave – What a shameless plug for Michael Moore’s film “Sicko” ! :)

  25. 25
    Dave says:

    Yeah – it’s the truth. You basically have two people with major medical bills late in life that would have wiped them out otherwise.

    Don’t get me wrong – plenty about the health care system in Canada drives me crazy. The biggest thing I hate is that a) you pay your taxes and get health care b) the person next you doesn’t pay taxes and gets health care, c) if you both need the same treatment, d) you are behind him in line, e) you pay for his bill and get served second.

    I haven’t had it happen to me personally (my entire professional life I have been in the US), but when it comes to diagnostic procedures (suchas cat scans etc.) it would really chafe. More so now that I have a kid. The one time I needed a scan here it was next day. The same sort of scan north of the border could take weeks/months. I just had a lump in my wrist – imagine you child has a lump in their skull.

    The theory is better than down here – but the implenentation is hard to get right. The system will probably break with the baby boomers retiring – I don’t really want to be there for that. Either the system will really break or the income taxes will sykrocket. Either way it will be interesting for them.

    Dave

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