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October 19, 2009

With a strong Canadian dollar, is now the time to purchase American real estate?

A high dollar may be an added bonus if you are purchasing US real-estate, but it shouldn’t be your main source of motivation.

According to Philip McKernan (who recently co-authored a book on the topic called South of 49: The Canadian Guide to Buying Residential Real Estate in the United States), in the Canadian Press:

“When the dollar hit par in (2007) there was a sudden rush south of the border for people buying real estate, and to make a decision on a differential of 10 or 15 per cent on a currency is absolutely and utterly insane, in my opinion,” said McKernan, who recently co-authored a book on the topic called South of 49: The Canadian Guide to Buying Residential Real Estate in the United States.

“If their motivation is based on the fact that there’s a deal to be had south of the 49th parallel… I believe personally that’s the wrong motivation,” he said.

Lest we forget what happened to people who bought property when the loonie was strong than the American Dollar in 2007? These people are probably not very happy, due to the severe bearing from the sub-prime mortgage crisis and the current economic conditions.

But, then again, many people disagree with McKernan saying that the housing crisis in the States combined with the strong Loonie has created a “once-in-a-lifetime opportunity” to buy property south of the border.

What should you do? Do your research!! Here are some helpful hints from the article “Dollar good to buy U.S. property, but shouldn’t be your motivation: experts“:

(i) decide whether you’re looking for a “lifestyle property” or an investment, and know the ramifications of both;
(ii) understand the tax-differences from your current place of residence, to where you are buying; and
(iii) if looking for a property, know the your mortgage limitations.

Remember to ask yourself if the US real-estate market it stabilizing… while there have been recent signs of stability in the U.S. housing market after three years of plunging prices, record foreclosures persist… according to a report released last week by RealtyTrac Inc, the foreclosure crisis affected roughly 938,000 properties in Q3, compared with about 890,000 in Q2. That puts foreclosure-related filings on a pace to hit about 3.5 million this year, up from more than 2.3 million last year.

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