My previous post mentioned the activities of Canadian real estate syndicators in the U.S. southwest and Latin America. This is only part of a significant Canadian buying spree that I see happening throughout the U.S. “Desert Southwest”. Most of the Canadian buyers are actually couples or families.
The oil and potash boom in western Canada has provided new wealth to many Canadians, and now that the Canadian dollar is worth more than the U.S. dollar, many Canadians are taking advantage of the oversupply of homes in the U.S. Desert Southwest to buy themselves winter vacation homes, as winters in Alberta and Saskatchewan are legendary for their dreariness.
In my Saskatchewan blog from last October, for instance, I did not mention that on my flight from Las Vegas to Canada I sat next to a Canadian woman who had just purchased a Las Vegas home for herself and her husband.
I’ve also met Canadian buyers in Phoenix and Tucson and most recently I have encountered a wave of Canadians buying in California’s Coachella Valley, better known as “Palm Springs”.
In February I appraised the Desert Dunes Golf Course, a beautiful, Robert Trent Jones-designed golf course bought out of foreclosure by Canadian investors. They have been bringing in many Canadian tourists, and many tourists like the quality and prices of the residential real estate that they see there. For those who are interested, the lender was Kennedy Funding out of New Jersey.
I am currently appraising a recently completed condo complex next to another golf course in Cathedral City, immediately east of Palm Springs. Only 6 out of 40 units have sold so far, but the buyers have been Canadian.
Areas of the Desert Southwest having significant oversupply of unsold homes and condos include the Las Vegas, Phoenix, Tucson and Palm Springs/California Inland Empire areas.
As for the Coachella Valley/Palm Springs area, the amount of residential oversupply appears to have stayed constant for a while, with Dataquick reporting a 7% decline in median residential prices in the last year as of April 2011.
The Cathedral City condo market in particular has about a 13-month supply of condos for sale, about the same as 18 months ago. Realtors generally say that a balanced market should have no more than six months of unsold inventory, so further condo price declines are likely. For an investor or flipper, this is not good news, but for Canadians seeking vacation condos, this has brought the median condo sales price in Cathedral City down to $115,500 (or 112,769 Canadian dollars), so this may be a good time to pick up a bargain to enjoy over the long term, taking advantage of the favorable Canadian/US dollar exchange rate. Prices are still declining, though, so no one should feel rushed to buy.
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