Canucks in Florida, go home

American families are being shut out of the starter-home market, causing a backlash against foreign investors.

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by

From the Summer 2013 issue of the magazine.

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Alan Lulay, a sales consultant with Divosta/Pulte Homes, rig
U.S. families may have a few choice words for Canadians hoping to buy a property down south. That’s because many Americans feel they’re being shut out of the recovering housing market—forced to wait, watch and rent the homes they’d like to purchase, as Canadians, Chinese and institutional investors, among others, outbid them and snap up single-family homes.

Over the last couple of years, U.S. real estate has started to make a slow comeback, with homes appreciating 20% to 40% since the 60% drop in value during the 2008 housing crash. This makes real estate very affordable for Canadians, if not for American families.

“Your average working family, at least where I live, is not able to buy a home,” testified Democratic congresswoman Loretta Sanchez to Federal Reserve chairman Ben Bernanke in May. Sanchez lives in California, home to some of the country’s hottest residential real estate markets, and a favourite among foreign buyers, including Canadians. Sanchez worries locals are becoming “permanent renters” due to the influx of cash-only investors into the U.S. housing market. “People feel it’s a little unfair,” says Arnold Porter, a Phoenix, Ariz.-based realtor who works with Canadians buyers.

To put things in perspective, international buyers bought 4.8% of the five million U.S. homes sold in 2012. By far, the largest group of foreign buyers was Canadian—accounting for nearly 25% of those property purchases. But the bulk of property investment purchases has actually come from institutional money. “These investors looked at the stock and bond market, saw there were better returns on real estate, and began investing in homes and renting them out,” Porter says. As a result starter homes, typically priced at US$200,000 or less, are attracting bidding wars. Often cash buyers—rather than families financing through lenders—win.

Even so, Canadians can still find deals south of the border—particularly in condos and vacation homes. “Canadians who buy one or two homes aren’t impacting the market. It’s the large institutional investors who are getting the backlash,” says Porter.

9 comments on “Canucks in Florida, go home

  1. I think that this commentary is very narrow minded. 25% of 4.8 % is just over 1% of all the sales? I think targeting Canadians is unfair. In fact in some areas like Florida, they should thank us for our injection to help prop up their economies and create jobs when they were truly in dire straights.(They don't say much about that). All the houses purchased and renovated by Canadians that were abandoned, bringing the values of all homeowner properties up. All the property managers down there could support that. Not to mention the stores we shop in, the eateries, the taxes we pay on all of our purchases etc.

    There are many very nice places in Florida that can be purchased for $40,000 to $60,000 even today. If that is not affordable for a family then I don't know what they are expecting as a starter price? Who is complaining? Someone driving a $50,000 truck that takes $150.00 of gas twice a week? (there sure are a lot of those down there) I think someone is trying to create headlines where there are none.

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  2. As a Canadian who has chosen to invest for retirement in the US real estate market, I am sensitive to what this experience may be like for Americans. For years, the Canadian market has been enticing to international buyers, and holiday dollars were devalued with disparity in conversion rates. I understand that feeling of trading at less than par. I recall times when the Cdn dollar was traded in US currency for even $0.65. I hope that the value gained in investing in Canada in different times was appreciated, just as I appreciate the opportunity now to invest south of the border. Canada and the United States are both exceptional countries. I appreciate the hospitality and welcome I have received, and hope my neighbours south of the border experienced the same when the economy was different.

    I also see that foreign investment in the United States has been responsible for some of its recovery, and I don't doubt that in time a correction in the markets will see the "tables" shift again.

    When I travel throughout Florida, I am a gracious guest and in most places hear from Floridian workers how thankful they are to have "my" business. In return, I am thankful to share space in your country, and treat you and your country with hopefully the same respect you receive when you're sharing space north of the border.

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  3. The tables have turned and the Americans don't like it. Too bad. Now they know how the rest of the world liked them for the past 50 years.

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  4. When I do the math re Canadian buyers, we represent one quarter of 4.8% of 5,000,000 homes which is 60,000 homes or 1% of the total homes sold. I find it hard to believe we are making that significant an impact on the US market. Plus one should also keep in mind that the people who buy these homes are also spending their money fixing them up which represent much needed jobs.

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  5. What a ridiculous , short sighted comment. I wonder what the economy of Florida would be like if all the Canucks did go home? I would think most business owners who live with the reality of the slow days of the off seasons look forward to the return of the snowbirds spending their money, keeping bars, restaurants and stores busy during the winter months.
    Arizona is another case in point — after May a lot of businesses in the tourist areas actually shut down for the season as there is "no point" staying open when there is no one there to spend.
    If there wasn't the huge injection of snowbird dollars in Florida and Arizona we would probably be appalled at how many more low income families wouldn't be able to afford housing.
    I would be more concerned about that than the 1% of the homes that are being sold to Canadians.
    Americans should be looking at the root causes of these problems and focusing on sloutions rather than looking to cast blame on a group who may in realtity be part of the soloution.
    Typical American arrogance and fearmongering.

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  6. Great comments. And to the point. Canadians do represent a significant percentage of foreign buyers when it comes to US property. Yet, they are not the culprits when it comes to preventing US homeowners from buying back in. As mentioned in the article, institutional money — often from US hedge funds — are the real reason why US buyers are in bidding wars for single family homes. One reason why there is no backlash (and will be no backlash) on Canadians who have bought US real estate or plan on buying real estate.

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    • We have a FL home, nothing fancy, not in a 'community'. It is a country property with Floridian neighbours. Not in a tourist area. BUT close enough to all major hwys.We can attest that the state of FL LOVES Canadians.They admit they could not survive and thrive without the $2 billion a year we happily pump into the FL economy.It enables Floridians to pay NO State income tax for example.And pay 'homestead' property taxes. Our FL property costs us approx $300 a month year round to pay all utilities , taxes, Insurance, grounds maintenance,TV, Internet.Thats incredibly low living expenses.So if low income families in FL cannot afford $300 a month
      ……..they are spending their income on the WRONG THINGS!

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  7. What a ridiculous article. MoneySense should be using a bit of common sense in what they let writers publish. As one of the others mentioned Canadians represent 1% of the buyers. You don't have to be a rocket scientist to know that isn't going to have any impact. We bought a house in Florida and on more than one occasion when Floridians found out we were from Canada and that we were purchasing a home they thanked us for helping get their economy going again. The one lady even recognized that in addition to purchasing a home we were purchasing appliances, furniture etc. etc .etc. MoneySense should be ashamed for inflating a situation that doesn't exist. At best it is fear mongering.

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  8. Funny how the fears of Americans about Canadians bidding up the market sound like those Canadians who complain about Asian buyers affecting the Vancouver market.

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