Canadian buyers are cashing in on the U.S. real estate crisis
Tanya and Michael Bell traded mountain views for palm trees and they are not alone. In 2007, as the values of their Vancouver property and the Canadian dollar soared, the Bells started looking for real estate in the sunny south, where prices were plummeting. This year, they made the leap, buying a home in Weston, a gated community about 15 minutes from Fort Lauderdale . “The Bells bought a six-bedroom home that met all their criteria for $780,000,” says their realtor Mark Sadek, with the Keyes Company, the largest brokerage in south Florida . “A year ago they were looking at similar homes in the $1-million to $1.2-million range.”
Florida ’s once-hot real estate market is now frozen, and Canadians are knocking on realtors’ doors, hunting for luxury homes and condos. In the first quarter of 2008, Ryan Mendell, a broker with the Condo Hotel Company in south Florida , did more sales volume than all of last year. The reason — Canadian clients. “The highest concentration of Canadians is between Hollywood Beach and Bal Harbour ,” says Mendell. “We’re selling suites in brand new condos for $368 a square foot. A couple of years ago they sold for $600 to $700 a square foot.” Lawrence Yun, chief economist of the National Association of Realtors, says the Canadian dollar is stronger by 40 per cent over the last four to five years, while Florida prices have fallen by 10 to 20 per cent. “This means Canadians are able to purchase a home in Florida at half the price of four to five years ago.”
A 2007 study by NAR found Canadians are more likely to purchase homes worth over $1 million than other international buyers, which is a critical lifeline for realtors like Ralph De Martino, an agent in Miami Beach . Two of his most recent sales have been to Canadian buyers looking for oceanview properties. One condo, in pricey Bal Harbour , sold for $2.6 million, and the other, in Hollywood , went for $1.4 million. De Martino says the best deals can be found on condos that closed in mid-2005 because so many speculators have walked away. “There are some killer deals on beachfront properties but not necessarily with unobstructed views,” he says. “Properties not on the oceanfront, like the Miami River area where there has been massive construction, are also great deals.”
South Florida ’s condo market has taken the hardest hit. Steve Reibel, senior vice-president at the Keyes Company, says there are 25,000 condos in the marketplace now and another 20,000 units coming out of the ground. A recent report from the Florida Association of Realtors shows that condo prices fell 30 per cent from a year earlier in Fort Lauderdale and West Palm Beach-Boca Raton. In Miami , condo prices dropped only 11 per cent but sales are down a whopping 47 per cent. To get rid of this glut of condos, developers are enticing buyers with incentives like cars and free maintenance fees for a year. Or they’re slashing prices, encouraging Canadian purchasers like Michael Mazzaferro to sign on the dotted line. Mazzaferro, who lives in Montreal with his wife and two small children, paid cash for a condo in March in Hollywood, located between Fort Lauderdale and Miami, which serves as a winter haven for many Québécois. His brother-in-law just purchased a home in Boca, and another brother-in-law is now looking for a property.
The best deals, of course, come at the expense of owners who cannot afford to hold onto properties until the market picks up. There are thousands of short sales, where banks allow properties to be sold for less than the mortgage value, and foreclosures were up 212 per cent from 2006 to 2007, with Broward County leading the way. Then there is the growing number of auctions, with many properties being sold without minimum bids. Keyes formed an alliance with a real estate auction firm in February to hasten the sales of languishing properties.
But there are signs that the fire sale may be winding down. Single-family home sales in Miami-Dade were up slightly in March compared to February, and Reibel says Keyes is seeing listing inventory plateau, with prices and sales volume starting to grow. But Tanya Bell isn’t worrying about real estate prices anymore. She’s enjoying the southern climate in her courtyard, under palm trees swaying in the breeze.