I’m thinking out loud here. Since, the Canadian dollar is now 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 estate.
What’s even better is looking at the 1972 to 1985 time period. After a period of parity in the 1970s, the Canadian dollar began to fall well into the mid-1980s. The increasing strength of the US dollar during that time period made instant profits for those holding US real estate.
I’m only showing this for pure historical reasons. I am not saying you should purchase real estate in Phoenix, and I am CERTINALY not giving you any kind of investment advice. I’m just looking at how currency fluctuations play a role in transnational investments.
In the above graph, the maximum was 349,600 CD reached on Dec. 18, 1985. The minimum was 250,600 CD on Jan 1st, 1972 . Between Jan 1, 1972 and Dec. 31, 1985 the 250,000 USD home increased 39.6% based only on the currency exchange rate. I don’t have the numbers on the increase in the real estate price. I’m confident that the 250,000 USD home had increased some in that time frame. So, this increase is conservative.
Again, as I said before, I am only thinking out loud. There are so many other factors to consider, such as mortgage interest rates etc. However, I can only imagine the kinds of gains a Canadian could realize in today’s market if the USD started to gain in value again over the next several years.
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on Nov 13th, 2007 at 4:26 pm
Interesting comments and certainly many of us in Canada are looking at U.S. properties, Arizona is
particularly interesting to us in western Canada.
With the Canadian dollar now worth more that the U.S. dollar ( $1.05 today), it makes for some
interesting investment opportunities.
You are correct that major gains are possible if the U.S. dollar recoups recent losses.
The worry is that the U.S. economy may not have hit the bottom and that the mortgage woes won’t peek
for several months.
Don Weisbeck
Brooks, Alberta, Canada
on Nov 13th, 2007 at 6:11 pm
Don,
Recent market conditions are worrisome indeed. I’m not sure if the US dollar will make it back to prior levels. However, at some point the US Treasury may start buying back dollars to limit supply and increase value. However, this would be short lived. We’ll see.
Thanks for stopping by.
on Dec 13th, 2007 at 9:50 am
You’d be surprised, Don. I work with a firm that helps a lot of Canadians with housing purchases down here in the States, and many of your compatriots do not seem to have the same worries about the market down here.
That is, we’ve seen such an increase in Canadians inquiring about/buying US property (Arizona & Florida being the usual destinations) that I think many people are thinking “exchange rate savings” first and “market conditions” second.
What sort of trend sare you seeing, Guru?