Western Canadians are buying real estate in Arizona. There are four reasons for this modern day land grab:
- Crude oil and minerals have led the commodities price surge, world wide. Western Canada is rich with both minerals and crude oil. While the Western United States is experiencing a housing-led recession, the opposite is happening to our Northern neighbors.
- The Canadian dollar (sometimes called the “loonie”) has reached parity with the American dollar. What used to cost a Canadian $1.15 , now costs about a buck.
- Housing prices in both Arizona and Southern California are over 20% off of their high prices.
- Mortgage rates, for Canadian investors, have dropped from 8.5% to 7.2%.
Let me lay it out for you in a story. Bob Miller, from Calgary, earned some $150,000 Canadian in 2006. Bob works as a petroleum engineer. His 2007 income rose some 25% to $190,000 because of the high demand for petroleum engineers in Western Canada.
Bob’s purchasing power, in 2006, was about $127,000 American. He could afford to buy a golf course property, in Avondale, AZ, for about $350,000. To do that, he’d need about $135,000 Canadian for a down payment and have a mortgage payment of about $2,000 Canadian, or 16% of his monthly income.
A compendium of articles about how Canadian investors need mortgages from U.S. Banks: