Canadian Currency Update #2
Last year I wrote about the increasing strength of the Canadian dollar relative to U.S. currency, and the result of a favorable currency exchange rate to Canadian investment here. I also discussed the positive impact the exchange rate makes to my fellow Canadians when purchasing here.
Since that earlier blog, things have just got better for the Loonie. In the middle of last month the Canadian dollar climbed as high as .98. This week it is .95, which is still very strong historically (eight years ago it was .62). A favorable exchange rate is very important to Canadians, because it means that our prices remain attractive, so they should continue to be major purchasers of Arizona properties.
One reason for the rise in the value of its currency is Canada’s favorable economic outlook and the prudent handling of its public debt. The Globe and Mail says the sustained strength of the Canadian dollar and economy is getting international attention (http://www.theglobeandmail.com/report-on-business/economy/loonies-star-keeps-getting-brighter/article1606829/?cmpid=rss1). The Russian Central Bank has stated it will add the Canadian dollar to its international reserves. Other central banks are expected to follow suit.
Traditionally the U.S. dollar has been the currency of choice for reserve managers. The Euro was beginning to make inroads in foreign exchange markets, but with the poor economy in Europe, it is no longer a viable option. This has made the Canadian dollar a player in global currency reserve strategy.
Meanwhile, the news from the housing market in the frozen north is not as good. The value of building permits has plunged 10.8 percent, and home sales in my hometown of Toronto were down 23% from June a year ago. Vancouver’s home sales fell 30.2% over the same period. According to the Financial Post (www.financialpost.com), new, stricter mortgage rules have also negatively impacted the Canadian real estate market.
In addition, both Ontario and B.C. have enacted a “harmonized sales tax” effective July1. The tax will be newly applied to services such as real estate commissions. Since taxes are typically passed through to the client, the cost of real estate transactions can be expected to increase in those two provinces, which may further weaken demand. Read more at http://www.financialpost.com/news/Home+sales+sink+markets /3241780/story.html.
But bad Canadian real estate news is good for Arizona sellers of residential and commercial real estate. Together with the favorable currency exchange rate, hopefully this will result in even more purchases by Canadians in Phoenix/Scottsdale area.
If you think your Phoenix metropolitan area home or property could benefit from marketing to the Canadian buyer, call or email me at firstname.lastname@example.org. Let my expertise as a Certified International Property Specialist, and SimplySOLD Arizona’s international emphasis, help your next sale.
– N. Mark Kramoltz © 2015