Canadian Investors, American Real Estate: The Currency Play

by: Brian.Brady on October 21, 2007 07:36:29     3 comments »

Canadian investors are looking at California real estate, as a good long-term investment, because of the devaluation of the US dollar.  Simply put, the falling California real estate market, combined with a weakened and leveraged US economy, is giving Canadian investors a double whammy of a chance to own prime, California properties, cheap.  This series will attempt to educate Canadians, looking to buy California properties.

 

How does the exchange rate work?

 

In January of 2007, a Canadian investor, buying a $300,000 (US)  property in Long Beach, CA, , would have to pay $352,600 (Canadian).  That was based on an exchange rate of $1.17553 Canadian to $1.00000 (US).  Today, the exchange rate has dropped to $.98188 Canadian for one US dollar.  That means that the same property in Long Beach, would costs $294,300. 

 

But wait, there's more!  That Long Beach property dropped 10% in price from January, 2007.  Today, that property is offered for $270,000 (US).  When we account for the weakened American dollar, the real costs to a Canadian investor, for the California property, is actually, $265,100 (Canadian).   That's an $87,000 (Canadian) discount !

 

Instead of needing $105,000 (Canadian) for a down payment, the Canadian investor can buy this California property for less than $80,000 (Canadian) down.   The monthly mortgage payment,  in  Jan, '07 Canadian dollars, would have been over $1600 (Canadian).  Today, the mortgage payment for that same Long Beach property, would be about $1100 (Canadian); a 30% discount.

Canadian Investors Can Apply For a Mortgage Right Here.

 

See the devaluation of the US Dollar, compared to the Canadian dollar here.





Comment from: Laurie Manny [Visitor] Email · http://www.longbeachrealestatehome.com/

Brian,


Is the monthly payment you mentioned of $1100 based on a 30% down payment?

PermalinkPermalink October 22, 2007 00:06:49
Comment from: Brian Brady [Member] Email
No, Laurie; it's an interest-only loan
PermalinkPermalink October 28, 2007 01:22:52
Comment from: Melanie Narducci [Visitor] Email · http://condocontessa.wordpress.com

Right again, Brian ... and it's not just California, I thought of your post when I saw this Canadian article, "Let's steal Florida," http://network.nationalpost.com/np/blogs/francis/archive/2008/01/25/let-s-steal-florida-part-ii.aspx#comments


Thanks, as always for your insights and being ahead of the curves the market throws us!

PermalinkPermalink January 31, 2008 10:10:19
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