House prices in the Sunshine State are decidedly on the up, after a difficult few years following the global financial crisis. As homeowners celebrate, the many foreigners who had their eye on a retirement complex in Florida might find that they need to move quickly to secure their spot, with asking prices rising rapidly. Traditionally, Canadians have been the biggest international buyers of homes in the US, with Florida their favoured destination, but the recent depreciation of the Canadian dollar, combined with these escalating prices, is challenging their dominance over the state’s international market.
Although prices are not yet up to pre-2008 levels, US sales activity increased by 9.1% in 2013, resulting in an 11.5% rise in the median asking price, according to the US National Association for Realtors. However, foreign interest has been tailing off, with $68.2bn in sales recorded for the year to March 2013, compared to $82.5bn for the year 2011-12. This falling demand reflects the rising asking prices, but for now, it’s still possible to track down excellent deals in Florida. Despite the declining loonie, Canadians still made up 29.6% of the foreign buyers in the state, while Latin America and the Caribbean combined only account for 32.1%.
Meanwhile in Canada, real estate brokers continue to do a brisk trade in Florida sales, offering potential buyers rising value and a range of climate and retirement-related benefits. Many Canadians are attempting to obtain their retirement property before prices return to pre-financial crash levels, renting it out as a holiday home until they’re ready to move down. The holiday rental market in the state remains solid – even in the face of rising prices, Florida still offers better value than many areas north of the border.
Last year, the numbers of Canadians visiting the Sunbelt increased by 2%. Compared to the previous few years, this represents a significant halt to rapidly escalating growth, but it’s worth noting that the numbers have still grown nonetheless. The falling value of the Canadian dollar has affected the country’s spending in the US, but value is only part of Florida’s hold over Canadians. Swapping snowstorms and freezing temperatures for 220 or more days of sunshine a year is persuasive enough for home sales in the Sunshine State to be only slightly subject to fluctuating exchange rates.
An analysis by TD Bank suggests that a 10% decline in the currency would result in 250,000 fewer Canadians visiting Florida, with an accompanying drop in spending of around 0.7% of the state’s GDP – usually between $250m and $400m. However, even this would not reduce Canadian spending in the state enough to see a return to the statistics of four years ago. It seems that despite the economy, the Canadian Snowbird Association will be going strong for a good few years yet.
If you’re thinking of spending your retirement in the sun, or if you’re simply hoping to find a comfortable holiday home, Engel & Völkers can help. With several established offices in the Sunshine State, we know the market and can help you find the perfect property. For more information, just visit the E&V website.