Arizona Mortgage Guru » Best Time for Canadians to Purchase Real Estate in the US

Best Time for Canadians to Purchase Real Estate in the US

By Shailesh Ghimire, October 17, 2007 at 9:01 am

Thanks to the weak US dollar, real estate in America has suddenly become less expensive for Canadians. As of the writing of this article 1 USD = 0.97 Canadian dollars. Less than six months ago one American dollar would have bought $1.15 Canadian. It may not sound like a lot of money but in terms of real estate it translates into thousands of dollars.

For example a $200,000 USD American home would have cost $230,000 Canadian six months ago. Now, this same priced home is $194,000 Canadian. If you factor in the fall in home prices during this same time, that very same home is now a lot cheaper for a Canadian citizen. So, deals abound.

How about obtaining home financing you ask? Well, for Canadians, the loan process is very similar to that for Americans. First of all the borrower will need to complete a mortgage application. The borrower will be required to furnish a letter of employment, relevant bank statements and a copy of a valid Canadian passport with an acceptable entry visa stamp. Once all the information has been verified the lender can then determine the most suitable program.

In my experience I have found that there are two distinct loan options available. The first option works if the borrower has perfect Canadian credit. In this case the lender can go through a large credit depository like Chase and pull Canadian credit into their system. The lender can then use this in making a credit decision. There is no tolerance for bad credit in this option. Even one late payment on a small credit card account twelve months ago can kick the application out.

Armed with solid Canadian credit the borrower now has access to a wider choice of mortgage loan programs. They can qualify for fixed rate programs with limited pre-payment penalties and other features common to conventional loans.

In the second loan option the lender does not pull Canadian credit and only verifies employment, the liquid assets and the visa status of the applicant. In this case the loan programs are rather limited. These programs usually involve high down payment, variable interest rates, balloon payments and pre-payment penalties. Not all of these features may apply to the loan but will most certainly include a combination depending on the lender.

The two program options I describe above are only available for the purchase of a second home. Purchasing a primary residence is still available but will require a long-term US visa such as an H-1B. It also requires proof of continued employment in the US for up to three years. The process is then exactly the same as that for Americans.

There has never been a better time for Canadians seeking to purchase a little bit of the US. As any serious Real Estate agent will tell you the Phoenix and Tucson areas are one the best markets in the country. Plus for Canadians its a welcome change in weather, not that this is earth shattering news! There are already a lot of Canadians here in Phoenix - I mean how else can you support a professional ice hockey team in the desert?

20 Responses to “Best Time for Canadians to Purchase Real Estate in the US”

Janet Burns wrote a comment on October 19, 2007, 7:50, am

Nice to see this article Shailesh. I’m Canadian and have been trying to get a Canadian friend to write an article for my blog on this subject from their perspective. From my perspective, as someone who spends a lot of time in Canada, I definitely miss the days when $1 US would get you $1.47 Canadian!!

Shailesh wrote a comment on October 19, 2007, 10:36, am

Janet,

Do try to get you Canadian friend to write. I’d be interested to see their perspective on this issue.

A Crazy Time for Canadians to Buy Real Estate in Bluffton and HHI - It’s Just Loonie! sent a pingback on October 22, 2007, 4:12, am

[...] dollar for the first time in over three decades. A stronger Canadian dollar offers great opportunities for snowbirds to buy real estate in the Hilton Head Island and Bluffton, South Carolina [...]

100th Carnival of Real Estate- HIP HIP HOORAY!!! « RE Revealed sent a pingback on October 22, 2007, 8:19, am

[...] head because it struck a chord with me the same way SHAILESH GHIMIRE struck a chord with “Best Time for Canadians to Purchase Real Estate in the US.” I won’t refer to any South Park movies here, rather I’ll say that Shailesh is [...]

Clearwater Beach Real Estate wrote a comment on October 23, 2007, 5:46, am

Shailesh, We have lots of Canadians that own real estate in the Tampa Bay area and especially near our beaches - this was a vry informative article - thanks, Cyndee Haydon

MarkCanuck wrote a comment on October 24, 2007, 6:37, am

CAN you tell me how much property tax costs in your area. In Canada property taxes are very high for people renting out.

Kapowich pleased to be included in Lani Anglin's "Carnival of Real Estate" #64 sent a pingback on October 24, 2007, 7:10, pm

[...] Shailesh Ghimire of AZ Mortgage Guru writes Best Time for Canadians to Purchase Real Estate in the U… [...]

John Wake wrote a comment on October 24, 2007, 9:16, pm

Mark,

I’m not a property manager, however, I believe the State charges 0.5% and then most cities have a sales tax on rents. I’m thinking it runs less than 3% in total. By the way, this sales tax on rents is officially called a “transaction privilege tax.” Anyone, please correct me if I’m wrong.

For homeowners and landlords, the property taxes themselves are crazy low in Arizona and much better than California or Florida.
http://www.howtobuyarizonarealestate.com/frequently-asked-questions/

Recent Re.net Writing Competitions: Liberal Business School Professors and Nacho Libre sent a pingback on October 24, 2007, 9:49, pm

[...] Shailesh Ghimire of AZ Mortgage Guru writes Best Time for Canadians to Purchase Real Estate in the U… [...]

Shailesh Ghimire wrote a comment on October 25, 2007, 7:41, am

Mark,

To piggyback on John’s comment, I use $1,200 per year for every $180,000 value in property. That is what I use to estimate the monthly taxes before we have a property.

Arizona Mortgage Guru » Blog Archive » Phoenix Real Estate in Canadian Dollars sent a pingback on October 25, 2007, 4:21, pm

[...] just recieve a commitment from a Canadian company to expand its operations here, but with the fall of the American dollar homes in Phoenix just got a whole lot [...]

Arizona Mortgage Guru » Blog Archive » Phoenix Real Estate in Euro and British Pound sent a pingback on October 26, 2007, 2:05, pm

[...] just got cheaper for Europeans wishing to buy a second home or investment property. Obtaining a home mortgage for Europeans is similar as that for Canadians. As I did yesterday, I have graphed what a $250,000 home would cost in terms of the Euro. This [...]

MarkCanuck wrote a comment on November 2, 2007, 8:16, am

Friends of ours purchased real estate in Florida. They wish they had not because their property taxes are three times higher than that of their neighbors. Florida does not like foreigners.

Arizona Mortgage Guru » Canadians Could Make a Killing in Arizona Real Estate sent a pingback on November 5, 2007, 3:21, pm

[...] at parity with the US greenback, I’ve been doing some number crunching. I’ve posted on what a 250,000 USD home in Arizona looks to a Canadian. It’s all good news for a Canadian seeking to purchase some Phoenix real [...]

Tony Branch wrote a comment on November 18, 2007, 4:42, pm

It is true that Florida’s property taxes are relatively high, and that is partly because other taxes are either non-existent or low in Florida. It is not fair to say that Florida does not like foreigners as one post suggested. Because of the Save Our Homes cap on property taxes that favors long time owners of homesteaded residences, it is not just Canadians but new home buyers, people who just arrived from other states and even from other cities in Florida that are harmed.

Fortunately, there is a proposition on the ballot in January which will help fix the mess, and public pressure is such that the Legislature should change it even more markedly in the next year.

Remember, most of Florida is by far the most reliably warm spot in the continental US during the winter. Along with Florida’s beautiful beaches on the Atlantic and on the Gulf in the Tampa Bay area and south to Naples etc., this should continue to attract Canadian! Now indeed is the time to buy.

Shailesh Ghimire wrote a comment on November 19, 2007, 9:17, am

Tony,

Thanks for clarifying the tax issue. I was hoping someone would and you finally did. Your answer makes perfect sense. I hope the person posting the earlier reply comes back to view it.

David Prescott wrote a comment on November 20, 2007, 4:59, pm

Could you offer any guidance for a Canadian wishing to buy an investment American property?
Which states would be best?
Best rents?
What about taxes?
What should an investor know about property managers?
What risks would be involved for absentee owners?

Cheryl Watt wrote a comment on January 5, 2008, 2:03, pm

I can not comment on the above as I am also a Canadian looking for answers.

What about Capital Gain at the end of the day when you possibly sell your US residential property. Are they going to tax you harder than an American Resident and if so how much? If they are to tax you heavily what would be the point unless it was just to have a vacation place to go?
Who would have knowledge in this? A good International Real estate rep, tax specialist?

Jared C wrote a comment on January 15, 2008, 9:01, pm

I know this post is old, but if you are canadian, and waiting to purchase property in the US… I would wait a bit longer, as prices in the US continue to drop, there will be better deals out there. Don’t rush into anything just because the pictures look good… take a trip down and make sure you are getting local pricing… This is very important!

Ian Share wrote a comment on May 11, 2008, 7:15, am

I recently just completed a trip to Phoenix to look at real estate. Undoubtably your site is designed to capture some financing business. I don’t need any financing. I’m more interested in helping Canadians fufill their dream of owning something in a warmer climate. I’m just releasing a 1/2 ad in Homes and Land on “Phoenix Awaits You” up here in Canada and I’m offering I’ll be offering a free 5 night stay in Phoenix to whoever wants to take a look at real estate there.
I have other advertising avenues that I’ll be hitting along with a web site - I know it probably sound strange but it’s not about the money to me it’s really about trying to help Canadians fufill their dream and capitalize on this fantastic opportunity.