Mav Realty

I am currently on my way to Victoria BC to a RE/MAX conference.  A lot of my business comes from Canadian citizens looking for vacation or investment properties.  Many of these folks are contemplating the same things that US buyers are.  Most commonly, is this the right time.  The exchange took a beating in the last few months.  While it was at par at the end of last summer, it has been hovering about 20 cents less for the last few months.  Many analysts predict that it won’t be long before it will rise up to around 90 cents again, and who knows how much more. 

One of the many factors that affect the exchange is the price of oil.  Many US citizens probably are not aware that Canada has large oil reserves and a significant portion of their economic welfare will depend on the world prices for oil.  While the lower oil prices are good for us in the form of lower gas prices and production costs for many goods, it has slowed down investment in the US from around the globe.  Obviously this is not the only factor, especially with the current global economic slowdown.

But perception has a lot to do with it.  Many of the 2^nd home buyers feel that prices will decrease further, and they also want to wait for a more even exchange.  The problem is that typically many of these economic factors tend to balance out.  For example for people taking loans, the interest rates are at near record lows.  As the economy strengthens, these rates will start to go back up, and so will home prices.  Historically, we have seen times where interest was low when prices were high, to balance and encourage more people to buy.  This is not one of them.  The prices are now down, and since the economy is slow, interest rates have been lowered to encourage movement.

One positive sign that this may be working is the inventory level for real estate in the Phoenix area.  Last month saw inventory levels drop to the lowest point since April of 2007.  While the levels are still quite high relative to a balanced market, any decrease is welcome.  If we can see a consistent reduction a few months in a row, I think we can say we have turned the corner.  Additionally, the past few months have seen significant increases in the number of homes sold compared to the same month a year prior.

So, what does it really mean?  Still to early to say for sure, but I like the signs I see.  Now is a good time to buy for anyone not worried about their employment situation.  As I said prices are low, and so are interest rates.  That is the typical formula for a good time to buy.  Many foreign nationals considering a purchase are now looking at taking loans instead of paying cash.  This will allow them to obtain the great prices now, and the ability to pay off the loan when exchange rates improve.  Locals should take heed of this as well.

A bit long for a blog post, but sometimes the mind gets ramblin’.

I look forward to hearing the perceptions of my Canadian colleagues on this trip, and will share them via video blog as well.

Adam Tarr, ABR,ePro,RSPS,CNE
Associate Broker
RE/MAX Excalibur
480-236-7374

adam@WeAreAZRealEstate.com