“Is now the right time to buy?” This is a question asked by arguably all individuals when considering a real estate purchase – be it in Florida or otherwise. As a home-owner in Montreal I understand that many factors can affect whether it is a buyer’s or seller’s market; among them the political and economic state of the city, province, state or country where the real estate is situated. This is especially true with a cross-border purchase as there is the political and economic situation of multiple jurisdictions to consider. As a Canadian buying in Florida or elsewhere in the U.S., it is important to stay current on the ever-changing tax laws and new government policies.
One of the states that our clients at Altro LLP are particularly interested in is sunny Florida. The reasons they are interested may not be the politics, but the economics have certainly made the Florida market especially interesting as of late. In a recent report by the BMO Financial Group, trends indicate that the Florida market is currently on the rebound. The report also notes that Canadians may be to thank/responsible for the seeming recovery from the market low in April 2011 following the crash in 2008.
“Canada is Florida’s number one source of foreign tourists and the state’s number one foreign buyer of real estate. In 2010, Canadians accounted for 36 per cent of all real estate purchases by foreigners.” This is what the BMO report shared with readers. In addition, Jack Ablin, Chief Investment Officer at BMO Private Bank, indicated two economic reasons behind the Canadian buying trend:
- Florida properties are a bargain, thus a buyer’s market that Canadians can benefit from when searching for a warmer winter home.
- The Canadian dollar is trading nearly 10 per cent above fair value versus the US dollar, therefore giving Canadians more buying power south of the border.
This begs the question: who is buying? In another BMO report from 2012, it was found that 16 per cent of Canadians would consider buying a home in the U.S. Currently 500,000 Canadians own property in Florida and the report suggests that 56 per cent of those buyers sought a vacation or secondary home and that 44 per cent bought due to affordability.
Increased buying due to affordability and other economic issues are among the factors that have led the price of a single-family home to climb 12 per cent since April 2011. Changes since April 2011 and current prices are reflected in the table below:
It is important to note that although prices and home/condo values have increased, that this may be due to buying trends when the market was low in the past year. Currently, sales are beginning to flatten and decline in the city of Miami and Lee County respectively. Is it still time to buy? There is no certain way to know how the market will react to the numerous factors in play.
Since homes and condos are gaining value this may ultimately make Florida a seller’s market once again, so it may be the time to buy, but everyone’s situation is different. However on a speculative note, current discussions by the U.S. government on extending the number of days Canadians can spend in the U.S. to eight months versus the current six months may affect the real estate market. The new proposal may continue to propel the market forward and increase Florida sales by giving Snowbirds even more reason to buy in the U.S., but this is still in the early stages of being considered.
Although good prices can be key to a cross-border purchase for either vacation or investment purposes, there are many factors that Canadians need to be aware of to ensure that they keep a bargain a bargain, as was pointed out when prices were very low circa January 2010 in a piece found in CA Magazine by David A. Altro, Managing Partner at Altro LLP, Florida Attorney, Canadian Legal Advisor & Quebec Notary.
The information contained herein is for informational purposes only, and is not legal advice or a substitute for legal counsel. It is not intended to be attorney advertising or solicitation. If you have a legal question, please consult with a licensed attorney.
