March 10th, 2015 2:17 PM by Brent Ferry
The bank tells its clients that U.S. prices are expected to continue an upward trend in Florida, along with Arizona and other popular Canadians vacation property areas.
"U.S. housing is inexpensive when viewed through the lens of international real estate," says Jack Ablin, chief investment officer with BMO. "Residential real estate in Florida and Arizona is roughly two-to-three times median incomes. That is about half the valuation of many of America's trading partners."
Overall, U.S. house prices have increased 19 percent in the past two years, BMO says – but they're only about halfway back to their 2006 peak.
The median home price in Florida is $169,400. In comparison, the median home price for major centers in Canada is roughly $230,192 when converted to U.S. currency.
Traditional Canadian Winter destinations remain affordable. Compared to their peaks, prices in Tampa, Miami, Phoenix and Las Vegas have yet to retrace half of their losses.
Sal Guatieri, senior economist, BMO Capital Markets, notes that all the regions, except Miami, were considered highly affordable in 2014 when comparing median prices with median family income; Miami was considered modestly affordable.
"With the American economy and employment gaining strength, home sales and prices should continue to rise," says Guatieri. "We expect prices to increase about 4 percent this year, and we look for the U.S. greenback to strengthen modestly further against the Canadian dollar in 2015 before weakening next year."
Florida continues to be a hotspot with Canadians – the largest foreign buyers of Florida housing. More than 500,000 Canadians currently own real estate in Florida. Popular areas include Sarasota-Bradenton-Venice, Orlando-Kissimmee, Miami-Ft. Lauderdale-Palm Beach, Cape Coral-Ft. Myers, Tampa-St. Petersburg and Naples-Marco Island.
Jerry Bevers, regional mortgage manager of BMO Harris Bank in Florida and Arizona, advises that those interested in purchasing U.S. properties should consider financing the new purchase with a financial institution in the U.S. – preferably a Canadian-based bank with branches south of the border. "The process of purchasing a home and acquiring a mortgage in the U.S. is quite different than in Canada."
BMO offers the following tips for Canadians buyers:
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