Photo: John Brooks/Flickr
If you’re already a snowbird, it’s unlikely a falling Canadian dollar will compel you to unload your US property over the next few years. Meanwhile, the economic impact of a tumbling Loonie will be more pronounced for aspiring snowbirds who are looking for a way into the US market.
A report published today by TD Economics drew attention to the large number of Canadians that spend long periods of time south of the border every year and the economics that motivate their decisions. While 80 per cent of annual visits to the US are short same-day excursions or overnight trips, some estimates put the number of snowbirds who spend between three to six months per year in the US at more than 500,000.
Canadian snowbirds have accumulated significant US property, especially in Florida, over the past decade thanks to a strong Loonie and low home prices. But with the recent drop in the Canadian dollar and strengthening US housing market, TD said it anticipates a drop in new property purchases by Canadians.
“Canadians tend to buy comparatively inexpensive houses that have become in short supply,” wrote the report’s authors, Derek Burleton and Sonny Scarfone. “More than half of purchased properties were worth less than $200,000 USD, where inventories were down about 20 per cent in 2013.”
In light of the shifting market, renting US property will become a more appealing option for those looking to escape the cold winter weather.
It’s unlikely that the new market conditions will have much impact on existing snowbirds. In fact, snowbirds may be more inclined to hold on to their US properties as home values continue to appreciate.
Referring to the broader theme of the TD report, how a falling Loonie will impact Canadian spending in the US, the authors wrote that the weak dollar will primarily affect Canadians that “jump across the border to take advantage of lower US prices on goods.”
Burleton and Scarfone do not expect long-term visitors to the US who already own property to be significantly impacted and concluded that lifestyle choices motivate snowbirds more than economic ones.
“What’s more, the sizable share of snowbirds that own US real estate creates a powerful tie linking these individuals to their US communities,” they said.