A message to Canadians who bought US real estate

As a Canadian myself, I understand the needs and wants, hopes and desires, dreams and aspirations, of my fellow Canuck. We appreciate the use of the word “eh,” we love our Horton’s, poutine, and wear shorts when it’s sunny no matter how cold it is.  Despite the reputation, we're actually not particularly polite or easy-going. And for those of us from Vancity, we have a little "problem" when our hockey team loses...

But back to what matters.  Some of us had the foresight (or luck) and invested in real estate down south some time ago.  Admittedly, the real estate market down in Whatcom County has not done quite as well as the Lower Mainland, but it's still very respectable. After all, the Lower Mainland is flat out nuts. You probably know this, but median home prices in Vancouver hit $1,000,000 earlier this year.

Bellingham in particular has done well. Since 2009, we’ve seen steady increase in prices and more recently, a dwindling number of sellers and an ever-increasing number of buyers. In fact, median home prices in Bellingham are about $330,000 (US). That’s about $450,000 in Canuck-bucks as of this writing.

As a Canadian, if you own real estate in the USA, now might be the very best time to cash out…ever. Here are 3 reasons why:

1. It’s a seller’s market
2. The exchange rate
3. The market’s done well

Firstly, To say it’s a seller’s market is a bit of an understatement. Typically measured in months, inventory is ridiculously low.  There are lots of buyers, and very few sellers.  Multiple offer situations, cash offers, non-contingent offers are the new normal, especially on fixers and investment properties.  Obviously, if you are a Canadian resident your property down here is an investment – and highly sought after!  Take advantage of that!

To give you an idea, a “balanced’ market is defined when inventory is about 6 months, with fewer than 6 defined as a seller’s market, and greater than 6 defined as a buyers'. Well, for a typical home in Bellingham it’s about 1.5 right now.

Secondly, imagine the following scenario: buying a house for $100,000, selling it for $95,000 a few years later, and making a profit of $25,000. How is this possible? Thank the exchange rate!  Put simply, when you sold your Canadian dollars to buy American, you were essentially SHORT the CDN $. Meaning, if the CDN $ went down, you made money. Well, over the past few years the CDN $ relative to the US $ has gone down quite a bit. This means that if you were to sell your US real estate and convert US $ back into CDN $, you should realize a profit from the exchange rate change alone.

Finally, thanks in part to general economic recovery, steady and low interest rates, etc., prices across the board have increased.  They won't forever and there are some indicators that area foreshadowing a recession, although how deep and widespread a recession it will be remains quite unclear.

So there it is.  3 solid, different tailwinds working for you and therefore 3 solid reasons to consider selling.  Each day you wait is a risk that one of those will turn against you.  Believe me, you don’t want to be the person who in 2 years says, “dang, I should have sold.  Now I'll have to wait this storm out...”