We are all fascinated with parity, the thought that we our Canadian dollar can buy exactly one American dollar, even though technically, parity is just a number. While economists continue to forecast a rise in the Canadian dollar over time along with some volatility, Canadians are hurrying to take advantage of its strength.
The combination of the strong Canadian dollar with historically low Florida real estate is making many Canadians believe that this is a once in a lifetime buying opportunity for them. The number of Canadians buying U.S. real estate of all foreign buyers is incredibly high, approximately 23%. In addition, property prices have fallen about 40 to 60% from their peak, creating a sense that this is the right time.
“Every time the dollar reaches beyond parity, we see a spike in the number of calls we get of Canadians purchasing U.S. dollars for their property purchase” says Rahim Madhavji, president of Knightsbridge Foreign Exchange, an online currency exchange company. “Many Canadians that have been travelling to the U.S. for years see this as the right timeâ€¦the buzz around cheap real estate and the strong Canadian dollar is creating euphoria”
With almost one in four homes in the U.S. financially underwater, some claim low prices will stay for some time, especially considering the shadow inventory of units not on the market as of yet. Many agents tell Florida buyers to expect at least five years before they see a meaningful turnaround.
Many Canadians are also considering Florida property for investment purposes. “We’ve seen the same clients come back a few times buying condos in Orlando for $40,000 to $60,000,” says Madhavji. However, Canadians need to be careful about U.S. tax laws when considering either a vacation or investment property.
In Florida, Canadians can expect to pay higher property tax than residents. Moreover, those that rent out property may face a withholding tax (about 30%) that is applied to rental income paid to Canadians.
Despite some of the complexities of purchasing U.S. property, many are snapping them up and many agents now focus on serving Canadian buyers and can make the process relatively seamless.
About Knightsbridge Foreign Exchange
Knightsbridge Foreign Exchange, www.knightsbridgefx.com, helps individuals obtain competitive currency exchange rates and helps businesses navigate through volatile currency markets.