You could have bought a pad in Florida. Maybe you should have bought a pad in Florida, back when condos there were going for $50,000, but guess what? It’s too late to get a bargain now.
After years in the post-bubble doldrums, the U.S. housing market is on the mend. Meanwhile, the Canadian dollar is falling. Put those two things together, and you have a U.S. housing market that’s looking a lot more expensive for Canadians these days.
Bank of Montreal economist Robert Kavcic put together this chart showing U.S. house prices for the 20 largest cities, expressed in Canadian dollars. They've soared from the C$140,000 mark three-plus years ago, to around the C$260,000 mark today.
By Kavcic’s calculations, U.S. home prices have been growing at a rate of about 20 per cent per year, in Canadian dollars. That outstrips the gains in the Toronto and Vancouver markets by a mile.
“You might recall us harping a while back … something about a generational opportunity for Canadians to buy U.S. real estate,” Kavcic wrote in a client note. “Well, that ship has sailed faster than even the biggest bulls could have imagined.”
Newly constructed houses in Kingston, Ont., on Nov. 18, 2015. (Canadian Press photo)
The Tables Are Turning
On the other hand, now is the best time in years for Americans to buy real estate in Canada.
National Bank senior economist Krishen Rangasamy did the same calculation as BMO’s Kavcic, but in reverse. Despite the rapid rise in house prices in some Canadian cities recently, the Canadian housing market hasn’t been this cheap for Americans in years.
“If you’re an American investor, thanks to the USD’s surge relative to the Canadian dollar, Canadian home prices are the most affordable [they’ve been] in over five years,” Rangasamy wrote.
One final thought: Royal LePage reported Tuesday that the average price of a home in Canada has passed the $500,000 mark. Given that the average price of a house in the U.S. is just under $183,000, in U.S. dollars, you can still get a lot of house in America for your Canadian property.