Albertans grab southern real estate bargains
A perfect storm of economic trends is allowing winter-weary Canadians to snap up southern real estate at bargain prices.
And Central Albertans are among those taking advantage of the opportunity.
Local real estate agents say they are fielding a steady stream of inquiries about property in the United States and Mexico.
“We get a number of calls on a daily basis here from people who are interested,” confirmed Jim Escott of Royal LePage Patrician.
Norm Jensen of Royal LePage Network Realty Corp. said his office has an “unbelievable” number of clients asking about opportunities down south.
Some, added Dale Russell of Re/Max Real Estate Central Alberta, are forgoing opportunities to buy here so they can pursue property in the United States or Mexico.
“I’ve lost sales here, because people were taking their money and going down there.”
This interest has been sparked in large part by the ailing U.S. housing market.
Mark Dziedzic, president of Phoenix-based Arizona For Canadians, said a recent search of listings in the surrounding Maracopa County revealed more than 57,000 properties for sale.
About 7,000 of these involved distress sales, where the owners were unable to make their mortgage payments or a bank had already foreclosed.
Dziedzic, who is from Toronto, described one home near Phoenix that had been financed to nearly $1 million but is now being marketed by a bank for $463,000.
He predicted the final selling price for the 4,200-square-foot home with a custom pool will be about $325,000.
Escott said a friend of his recently bought a house for $2.1 million that had earlier listed for $4.8 million.
And he related the story of a Red Deer resident who bought a townhouse for $675,000, and later learned that his neighbour paid $1.7 million four years earlier.
Walt Maciborski is an independent real estate broker near Palm Springs, Calif., and his wife Lynn is an agent with Coldwell Banker there.
They’ve been advertising their services in the Advocate and other Alberta newspapers, and during the cold snap in February were receiving several calls a day from Canadians.
Maciborski said there is no shortage of luxury homes available in the Coachella Valley, east of Palm Springs. A golf course property can be had for as little as $200,000, he noted, with “really nice” homes in the $400,000- to $600,000-range.
Prices have levelled out, he said, but the strong loonie remains a powerful incentive for Canadians to buy.
Originally from Wetaskiwin and a former student at Lindsay Thurber Comprehensive High School, Maciborski has worked in the California real estate industry since 1971. He said he’s never seen as many northerners in the market as there are now.
Albertans, including many from the Red Deer area, make up a high percentage of these.
Arizona For Canadians has also advertised in the Advocate. The company has held seminars, run radio spots and booked billboard space in Canada as well, said Dziedzic.
Like Maciborski, he’s amazed by the level of interest residents of his home country have in American real estate.
“One out every two buyers, pretty much, are Canadian.”
At least half are buying for investment purposes, he said, with some on the lookout for commercial property.
One impediment facing Canadians buyers is access to financing.
Jensen said many people return home frustrated with the reluctance of American lenders to do business with out-of-country buyers. His company is now working closely with Langham, Wiemer and Associates of Prudential California Realty in Palm Springs to ensure clients receive assistance when buying property there — including getting financing.
Maciborski said many of his Canadian clients close their deals with cash, using money from equity loans on their homes in Canada. Not only does this eliminate the need to arrange financing through American lenders, he said, it protects them from the risk of rising mortgage payments should the loonie drop.
As good as foreign real estate might appear, it’s not something to jump into recklessly, cautioned Russell.
He said there are a number of important considerations Canadians should be aware of when buying — from the risk of termite infestations to liability related to things like swimming pools. There are also tax implications, especially in the case of rental properties.
For those buying condominiums, there might also be a concern about the financial health of a condominium association that has a high number of defaulting members, he suggested.
“There’s an incredible amount of due diligence that needs to be done when you’re buying down there,” summed up Russell.
“It’s really important to do your homework before you make a commitment.”
Jensen added that the process of buying a home and transferring title is completely different in the United States. He’s been “astounded” by the paperwork these transactions generate.
Like Jensen, Russell and Escott have southern agents they trust and refer their clients to.
How long the south will remain a buyers’ market is a matter of speculation.
“Assuming the dollar doesn’t drop to 70 cents, I think this is going to last for quite some time,” said Dziedzic. “I think we’ve got a good two-year window.”
Russell wonders if the best deals are still to come.
“I’m not sure that prices have bottomed out.”
Jensen agrees with Maciborski that Palm Springs prices appear to have levelled out. Particularly in the case of properties that appeal to Canadians — those in gated communities or resort condominiums where security and maintenance are not ongoing concerns — demand appears to have halted the drop in prices.
Contact Harley Richards at hrichards@reddeeradvocate.com
