Is A Strong U.S. Dollar Bad for Canadians Looking at the Phoenix Real Estate Market?

avatarthumbnail.jpgThe answer, it would seem, depends on whether you’re a prospective buyer or already an owner of property here in the Phoenix real estate market.

What prompted this thought was a thread on John Wake’s Arizona Real Estate Notebook yesterday:

In the comments, one of John’s readers included a link to this article from Money detailing Bernanke’s new focus on fighting inflation. Part of that strategy would involved raising FedĀ  interest rates, which likely would lead to higher mortgage rates (even though recent cuts haven’t resulted in lower rates – primarily because mortgage rates move more based on market mechanics than Fed rates.)

Would higher interest rates spell doom for the Phoenix real estate market? There might be an impact in values but values already have taken a pretty decent hit in spite of several cuts in Fed interest rates. Nearly half the activity is taking place in the bank owned and short sale arenas. Speaking of which …

A bank owned home goes on the market Thursday in Tolleson. I arrive Friday afternoon as another agent was completing his showing. Called the listing agent and learned the home was under contract as of Friday morning. Days on market – 1.

If an increase in interest rates means a bank owned home sits on the market for seven days and not one, that’s a risk I personally wouldn’t mind taking.

As for Canadian owners, home values here are based on American dollars. If higher Fed interest rates strengthen the U.S. dollar against the Canadian dollar, the relative value of the property will increase correspondingly – you’re going to sell in American dollars, not Canadian.

That may not be such good news for Canadians who are sitting on the fence if and when the American dollar strengthens – relax, estimates are we’re looking at near parity for a while to come – but for those who already purchased, increased strength in the dollar is not so bad.

All in all, I find myself having to respectfully disagree with John’s conclusion in the comments of his post.

But that’s just me. Your thoughts?

[tags]Phoenix real estate, Canadian buyers Arizona real estate[/tags]

Jonathan Dalton

Jonathan Dalton is a 40-plus-year resident of the Valley and has been helping folks buy and sell homes since 2004. He can be reached at 602-502-9693 or info at allphoenixrealestate.com.

0 Comments

  • Gary Sattelberger 10 years ago

    There is one aspect for Canadians who have already purchased property in Arizona where the strong dollar will hurt, that being for those who used U.S. financing to make the pruchase. If they are paying in Canadian dollars on a U.S. mortgage and the value of the dollar goes up it will take more Canadian dolars to make the mortgage payment.

    So far my Canadian clients who have made a purchase did so with cash.

  • Jonathan Dalton 10 years ago

    Good point, Gary … I’ve only run across a couple of Canadian buyers who are financing here. Terms seem much better for financing in Canada and bringing down the cash.

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