BUSINESS

Low Loonie Causes Real Estate Slump In California

03/26/2016 07:58 EDT | Updated 03/26/2016 07:59 EDT

PALM SPRINGS, Calif. — Canadians are no longer flocking to California's sunny Coachella Valley to buy homes since their currency has weakened, and many are putting properties they own up for sale, real estate experts said.

The move coincides with a decline in the Canadian dollar since oil prices have plummeted, the Desert Sun newspaper reported on Saturday.

After the U.S. housing market crashed in 2007, the Canadian dollar achieved parity with the U.S. dollar, prompting many Canadians to swoop up properties in the region.

Even as the U.S. economy recovered, Canadians still made up at least 15 per cent of homebuyers in California's Coachella Valley, said David Emerson, a local real estate agent.

"Our Canadian buyers are not buying.''

Now, home prices have fallen in the region, and the number of homes for sale has jumped. Inventory rose by about 25 per cent over the last year, according to the California Desert Association of Realtors.

"Our Canadian buyers are not buying,'' Kelly Trembley, a realtor with Bennion Deville Homes, told the newspaper. "This was the perfect storm for the desert, and that's why our real estate right now is in a bit of a slump.''

Brian and Linda Pahl — who live in Vancouver — bought a three-bedroom home in La Quinta more than two years ago for $450,000. Now the couple hopes to sell it for $725,000.

If the Canadian dollar strengthens down the road, however, Brian Pahl said he hasn't ruled out another purchase.

"With the Canadian dollar being as low as it is, it pays to sell the home and pay the capital gains (tax),'' he said. "We can buy again in two years.''

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