Canadian investors snapping up Valley homes

Canadian investors snapping up Valley homesCatherine Reagor ~ The Arizona Republic April 9, 2008

Canadian investor Trevor Matheson has taken an interest in metro Phoenix's real-estate market. So much so that he plans to buy six homes in the area over the next year.

"There are definitely deals to be found in Phoenix," said Matheson, who plans to hold onto the properties for at least three to five years.

Matheson is among a growing group of investors from north of the border converging on the Valley's real-estate market to take advantage of falling home prices and a weak dollar.

Last year, 752 Canadian buyers purchased Valley homes, according to the real-estate data firm Information Market. That's almost double the number in 2006 and even in the boom years of 2004-05. Though Canadians account for only small part of the Valley's total housing market, their interest is growing, and that's giving home sales a boost. Through mid-March of this year, 381 buyers from Canada invested in metro Phoenix homes.

Valley real-estate agents, who have seen home sales fall dramatically during the past few years, are abuzz about all the calls and visits they are getting from Canadian clients.

"I am working with five different Canadian buyers now," out of the Scottsdale office of Realty Executives. "Many Canadians are seeing the weak dollar and what a great long-term investment Arizona real estate is going to be."

Short-sale bargains

Matheson purchased his first Valley home in January. Watson found him a house in north Phoenix's Kierland area that sold for $785,000 in 2006. The owners were facing foreclosure, and Matheson got it through a short sale for $470,000. Short sales let sellers avoid foreclosure, but a lender has to first agree to the price, which is less than what is owed on the home.

Matheson is looking to sell six homes in Edmonton, Alberta, to buy homes here. He is selling at the peak of the market in Edmonton, where the oil industry is big and the economy is booming as a result of record-high gas prices.

Canadian buyers are helping the Valley's sagging housing market, said Amy Swaney, vice president of Artisan Lending of Phoenix.

But they aren't typically getting financing through local lenders because U.S. lenders have pulled back on all types of investment loans as part of the mortgage meltdown.

Matheson is using a Canadian line of credit to buy his Valley properties to protect himself against fluctuations between the U.S. dollar and the Canadian dollar, known as the loonie. The loonie was worth about 70 cents to the dollar five years ago, but it's now almost equal.

Lowballing is risky

Last month, Canadian attorney Jeffrey Slopen took advantage of the low value of the dollar to pay $14 million in cash for a Paradise Valley estate. It's the priciest Arizona home sale to date.

Bob Hassett of the Paradise Valley office of Russ Lyon Realty said he is getting calls about luxury homes from many Canadians and some Europeans. Florida and East Coast cities are attracting more European buyers, while Arizona is seeing more Canadian investors looking for bargains. The state has long attracted Canadian visitors during the winter. Arizona is second only to Florida for Canadian tourists.

But some potential investors are losing out by lowballing the market.

Watson was recently working with a Canadian couple who were interested in a home that had been foreclosed on in north Scottsdale, where comparables sales were in the mid-$500,000s.

"This home was well-maintained and was listed in the mid $400,000s - a great buy," Watson said. "My advice was to come in with at least a $375,000 offer. However, they decided to offer $250,000."

She said the couple had heard property was selling for 50 cents on the dollar in metro Phoenix. So no matter what, they weren't going to offer more than 50 percent of the asking price, she said, and the bank turned the offer down.

"The buyers wound up getting back on a plane to Canada without having purchased anything," Watson said. "They could have had a great buy if they had just been realistic about the market."

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