‘Perfect storm’ for buying in the USA

Anybody planning on selling high and buying low?  Financial Post says its the perfect time to buy some property down south if you’re a Canadian.

“It’s hard to pick the bottom” says Brian Wruk, a partner in Transition Financial, a cross-border planning firm with offices Arizona. He’s telling clients not to rush to buy, but to have their Canadian dollars converted to U.S. dollars now — at today’s sweet rates — if they’re even thinking of buying.

“You need to get that currency risk out of the picture — get Canadian dollars into U.S. dollars now, so you’re ready to move.”

In Phoenix, Mr. Andersen estimates that about 70% of the mortgages are underwater, which means the amount outstanding on the loan is actually greater than the current value of the house. Competition for these units is fierce and almost everything is bought ‘‘as is’’ and most likely with cash. There are about 40,000 listings in the area, up from a more typical 10,000 units, but still banks generally won’t negotiate the price so most deals are done at list price or higher.

While Western Canadians often buy in Arizona and California, Eastern and Central Canadians favour Florida. And the housing situation is the same there.

“With prices like this it’s crazy not to buy,” says Diana Carter, an Ontario retiree who just had an offer accepted on a single-family house in Florida. Ms. Carter had spent four intense months looking at properties. “We looked at places for US$23,000 or US$24,000 but decided on something so much nicer for US$43,555.”

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bubbly
9 years ago

@jesse: How many of these B&B's are there? I don't think that it's realistic to expect that a significant number of people can turn their properties into short term rentals. I bet it's actually quite rare.

bubbly
9 years ago

@pricedoutfornow: OK, So it's about $4150/month with taxes. And then there is the cost of maintenance and heating. I doubt that he can cover all this by renting out the two suites.

Also, for his renewal, he will have to deal with shorter amortization too – another 500+ to his monthly payments, if he can keep the same interest rate…

jesse
9 years ago

@bubbly: if it's a business with cash flows to cover expenses you don't need much income at all. In fact more than a few people in this city make good money renting properties out full-time. Normally banks would ask for collateral but… you know the rest.

Every once and a while you'll see a monster property with 8+ rooms being sold, some of them are zoned for bed-and-breakfast style accommodations. One I remember hearing about in Collingwood was (I think) 8 boarding rooms asking $950K. The idea is you'd rent out rooms for short-term stay visitors for around $60-80 per night. With 50% occupancy that's $240-320/day or $7200-9600/month gross.

Anonymous
Anonymous
9 years ago

perhaps he or his spouse is dual citizen then i would think you would be allowed to do work on the phoenix partial rental/ partial owner occupied

or does arizona consider any out of state person a foreigner?

McLovin
McLovin
9 years ago

This is total BS! It is 100% ILLEGAL for a foreigner to buy a home in the USA and live in it part time and rent it out (run a business) when they are not using it themselves. If they are found out to be renting it out fine if it’s registered as a business. However they as landlords are NOT allowed to make a single improvement or even mow their lawns, paint or fix anything during the time they are using it for themselves. You can’t have it both ways. You either live in it and leave it empty for the rest of the time or you run it as a business. Only if a person has a work permit can one work on a home they are renting out otherwise all work must be done by locals. Who's… Read more »

rp1
rp1
9 years ago

#69 @pricedoutfornow: 900k on 50k – that makes him an honorary Lehman Brother!

pricedoutfornow
pricedoutfornow
9 years ago

@bubbly:

The mortgage payments are around $3800, 35 year, 3.75% fixed. I think he has 2 suites.

bubbly
9 years ago

@pricedoutfornow: If he has a variable rate mortgage with an extremely low rate of 2.5%, than his monthly payment including taxes would be around $4,000 with 30 year amortization or ~ $3,300 with 40 year amortization. According to the normal mortgage rules, his family income should be around 300k/year, but since Vancouver is special, 50k will do.

Then there is maintenance and heating for the home…

He must have a really full house. Perhaps his tenants live in the house and he sleeps in the garage?

Patiently Waiting
Patiently Waiting
9 years ago

@paradox: "I would not be surprised if eventually the taxpayer will compensate one way or another those speculators at the village."

I don't think so. It appears to be all or nothing, and "all" is way too expensive considering how far the COV is already in the hole. COV will resist them and probably win. How can they not win?

VHB
VHB
9 years ago

Well, here is the projections for month end, as of yesterday. We are missing data from 4 days. I just projected using the moving average for those holes. Wachagonnadoo. Likes like we have a good shot at 7K listings, which is the threshold for an OMG inventory month. We also look to be under pace for 4K sales, which is the OMG sales threshold. Love the Oly Village story, guys! March 2011 month-end projections Days elapsed so far 7 Days missing 4 Days remaining 12 5 Day Moving Average: Sales 156 5 Day Moving Average: Listings 298 SALES Sales so far 1194 Projection for rest of month (using 5day MA) 2496 Projected month end total 3690 +/- 439 NEW LISTINGS Listings so far 2208 Projection for rest of month (using 5day MA) 4773 Projected month end total 6981 +/- 554… Read more »

CRASH JPMorgan-Chase
CRASH JPMorgan-Chase
9 years ago

从里士满新闻:大多数聪明的人已经把他们的家在地震以来出售,因为他们刚刚发现,买了昂贵的房子,他们将获得由巨浪摧毁了,当大地震来。

fixie guy
fixie guy
9 years ago

@69 pricedoutfornow Says:"And….WTF was the bank thinking when they gave him a $900k mortgage???"

"Phew, glad we sold that off as a mortgage backed security"?

pricedoutfornow
pricedoutfornow
9 years ago

I met someone today who has an $900,000 mortgage. This person has never made more than $50k in income in a year. I am appalled. $900k!!!! How does he make the mortgage payments? Well, of course he rents out most of the place he "owns". The rent does cover the mortgage, admittedly. BUT, my question is: what happens when he goes to renew in 4 or 5 years and the payments are double, because the interest rate's gone up? And….WTF was the bank thinking when they gave him a $900k mortgage??? WTF, WTF??? That's all I have to say. This whole housing market is a big WTF!

paulb.
paulb.
9 years ago

@Bizznitch:

Wow, that won't be good for sales…

CRASH JPMorgan-Chase
CRASH JPMorgan-Chase
9 years ago

@Renting: "I had a relative buy a winter house in a suburb of Phoenix. An area like Langley or Surrey. They paid 130K for a decent 2000 ft house almost 1 year ago. The same house would sell for close to 500K in Langley. They rented the place furnished for $2600 per month when they were not using it. Probably what you would get for rent in a 500K furnished Langley house." This is total BS! It is 100% ILLEGAL for a foreigner to buy a home in the USA and live in it part time and rent it out (run a business) when they are not using it themselves. If they are found out to be renting it out fine if it's registered as a business. However they as landlords are NOT allowed to make a single improvement or… Read more »

CRASH JPMorgan-Chase
CRASH JPMorgan-Chase
9 years ago

@jesse: Phoenix LOLOL?????? What kind of low life loser would even think about moving to Mexico?

Here is what you get for 1,000,000.00 in a place a million times better than Arizona
http://www.youtube.com/watch?v=BnIIbiaZ80s

paradox
paradox
9 years ago

I would not be surprised if eventually the taxpayer will compensate one way or another those speculators at the village. This will be a complete discgrace but that is what our society has become unfortunately. When all our economy depends on RE, the specualtors will take the taxpayer hostage just as the banks did. After follwoing RE in this city for some time, I am going to say confidently that we have reached the peak. The path forward is down. A friend of mine in the business for 20 years, just laid off 15 people today and sold his business for land value only. Price offered on the land by the developper was such that it did not make any sense for him to continue running the business. This is what RE speculation does to the economy, slowly but surely… Read more »

Bizznitch
Bizznitch
9 years ago
HAM Sham
HAM Sham
9 years ago

@chip: Agree with you on both points CHIP. The merger frenzy was fueled by a need to reduce margins via competitive pressures, and consumers benefitted from this. Also, vast majority in FIRE (ie: money changers) are grossly overpaid for what they do. I've always seen an inverse relationship between the volume of work done and pay received in my business. Typically, those in admin. functions do 70%+ of the work and get paid less than half of those in sales and managerial functions. But as I said, if any company actually paid their employees what they THOUGHT they were worth, they would be screwed. I think this would apply pretty well across the board to almost any industry. All I was saying is that people value themselves quite a bit higher than what the market for their services actually dictates.… Read more »

Best place on meth
Best place on meth
9 years ago

Asian markets just opened and have promptly shit the bed.

http://finance.yahoo.com/intlindices?e=asia

chip
chip
9 years ago

@HAM Sham: "Sad reality of capitalism… if a firm pays people what they’re worth, you probably won’t in business for long. I work in the FIRE sector, and every company that paid their employees what they were worth got bought out back in 90′s by firms that were driven by ROE over “people value”." First, your salary is best determined by what the market is willing to pay. If a rival company was able to buy you out and apparently thrive with lower costs, this resulted in lower costs for consumers, ie, a productivity increase that is the bread and butter of wealth creation. Your worth is not self-defined. Second, I think you would be hard-pressed to say people in finance, insurance and RE were (are) underpaid in the last 20 years. We're undergoing a fiscal hangover of mammoth proportions… Read more »

bubbly
9 years ago

@4SlicesofCheese:

"This is not my fault," said the unidentified owner. "All I did — I just paid $1.3 million for this unit."

Dum, dum, dum, dum, dum…

Anonymous
Anonymous
9 years ago

February MOI calculations for each of BCREA's regions (listings and sales data from BCREA website). BC Northern Listings: 2270 Sales: 226 MOI: 10.0 Chilliwack Listings: 1451 Sales: 174 MOI: 8.3 Fraser Valley Listings: 7257 Sales: 1201 MOI: 6.0 Greater Vancouver Listings: 12866 Sales: 3140 MOI: 4.1 Kamloops Listings: 1672 Sales: 160 MOI: 10.4 Kootenay Listings: 2392 Sales: 116 MOI: 20.6 Okanagan Mainline Listings: 5503 Sales: 337 MOI: 16.3 Powell River Listings: 208 Sales: 22 MOI: 9.5 South Okanagan Listings: 1733 Sales: 89 MOI: 19.5 Northern Lights Listings: 257 Sales: 25 MOI: 10.3 Vancouver Island Listings: 5140 Sales: 451 MOI: 11.4 Victoria Listings: 2981 Sales: 469 MOI: 6.4 BC Overall Listings: 43730 Sales: 6410 MOI: 6.82 Notice that buyers in February kept downing the Kool Aid in Vancouver and, to a lesser extent, Victoria. The rest of the province, not so… Read more »

bubbly
9 years ago

@4SlicesofCheese: LOL, Olympic Village – super luxurious, hyper-modern, super expensive and LEAKY! Hahaha…

Those buyers are really stupid:

Others claim they can't fit standard sized beds into their bedrooms

They did not measure the rooms before they "invested" hundreds of thousands to millions of dollars into this high end POS?

patriotz
9 years ago

@4SlicesofCheese:

But MacIntosh said he suspects the recent price reductions on unsold condos may have something to do with the civil suit.

There you have it.

Of course they have no grounds for suing the city in the first place since the city didn't sell them the units (and still doesn't own the unsold ones, Millennium in bankruptcy does).

But hey, it's the CoV that's got the deep pockets and I guess they think they can pester the city into paying them something. Good luck with that.