Real Estate: Hot Houses for Snowbirds

Ian MacNeill | January 26th, 2015

As the U.S. real estate rebounds, Ian MacNeill says snowbirds can still find a deal

Remember going to all those dinner parties a couple of years ago where all anybody could talk about were the bargains in U.S. real estate?

Four-bedroom homes with pools going for a few hundred thousand, million-plus mansions knocked down like Christmas ornaments in January clearance sales.

Notice how you’re not hearing those conversations anymore? For those with capital to invest, it was fun while it lasted, but the land rush is officially over. Thanks to an economic recovery in the U.S. and the winding-down of the sub-prime mortgage lending fiasco, housing prices in the Sunbelt have been steadily rising, especially for buyers with Canadian dollars, which have declined in value by as much as 10 per cent against the greenback.

“Buyers have to start adjusting their expectations,” says Dr. John Tuccillo, chief economist for Florida Realtors. “You’re not going to get that four-bedroom, four-bathroom home with a pool for $200,000 that you could have gotten a few years ago.”

The loss of affordable properties in Florida has been exacerbated by the fact that a lot of available homes were scooped up by bulk buyers who cashed in on the excess inventory in order to turn them into rental properties, he adds.

But it’s not all bad news. Despite the fact that prices have been climbing, they haven’t returned to the dizzying heights they once occupied; depending on what you are looking for and where, prices are still 10 to 30 per cent below what they were at the peak.

“The party’s never over,” says Tuccillo. “Nowadays, it’s more about knowing where it’s still going on.”

In Florida, bargain-hunters should be setting their sights on communities north of the I-4 corridor, which cuts across the state from Tampa to Daytona Beach. He singles out communities like Cocoa Beach, Titusville, St. Augustine, Panama City and Pensacola. These are less populated areas where prices started lower and have climbed less aggressively since the onset of recovery.

“These areas lack the south’s reputation and recognition, yet they are in a very beautiful part of the state with good weather and more affordable prices.”

On the other side of the continent, Palm Springs realtor Paul Kaplan says the mass migration of Canadians has slowed, and he has had to embark on a process of “re-educating” the ones still looking. “Forget about coming in with offers 20 per cent below asking,” he says. “Those days are gone.” On the good news side, prices are still 10 to 15 per cent below the peak, and what is available still represents a good investment because Palm Springs and the surrounding communities are essentially an international market that will always attract buyers.

“You’re not going to make $50,000 or $100,000 on a two-year flip anymore,” he says. “But homes here still have long-term holding value, and in the meantime you have a property you can use or rent out and use when you do retire.”

In Arizona, prices are also going up, but the silver lining is that so is inventory, says Diane Olson, a transplanted Winnipegger currently selling real estate in the Phoenix area. “There are still good deals because this year there are 26,000 properties on the market whereas at this time last year there were only 13,000,” she says. On the investment side, Olson says the days of expecting annual increases in the 10 to 12 per cent range are over. Or, if you’re buying a home to rent out, a five to seven per cent ROI is still a possibility.

She says Canadians are still in the market despite the rising tide because they still want a piece of the Arizona lifestyle and feel that if they don’t buy now they won’t be able to when they do retire. “Nobody can say what the market is going to be like in one or five years,” she says, “but we can be reasonably certain that it’s going to get cold in Winnipeg.”

NEXT: HOT REAL ESTATE IN CALIFORNIA

California

For generations, western Canadians have been drawn to California: the culture and cool of San Francisco or the glamour of Los Angeles. For snowbirds, it’s the desert communities of the Coachella Valley. Palm Springs is the cultural heart of the Valley, with its pedestrian-friendly streets, boutique shopping and wealth of alfresco dining options. Going southeast takes you through the golf havens of Rancho Mirage and Palm Desert to the increasingly suburban towns “down valley,” many surrounded by gated communities – preferred locations for many Canadian snowbirds.

Palm Springs

Single Family Home

Peak: July 2006 $531,000

Lowest: July 2011
$326,000

Recent: July 2014
$477,000

Two-Bedroom Condo

Peak: July 2006 $300,000

Lowest: July 2011
$173,000

Recent: July 2014
$231,000

Rancho Mirage

Single Family Home

Peak: July 2006

$824,000

Lowest: July 2011

$576,000

Recent: July 2014

$658,000

Two-Bedroom condo

Peak: July 2006

$404,000

Lowest: July 2011

$256,000

Recent: July 2014

$282,000

Alternative destination

Located in the desert just 80 kilometres north of Palm Springs, the city of Twentynine Palms offers good value in a desert setting. It’s also home to one of America’s last drive-in theatres. Average home prices are in the $80,000 range with rentals weighing in at about $800 a month.

 NEXT: HOT REAL ESTATE IN ARIZONA

Arizona

From the many communities in the Phoenix area (the Valley of the Sun) to the artistic city of Tucson and the frontier town of Bullhead City, Arizona has a long history of being a second home to Canadians. The climate may attract visitors initially but it’s the stark beauty of the desert that keeps them coming back. Although most gravitate to Phoenix and surrounding areas, there are many communities throughout the state where good value can be had in real estate including Fort Mojave on the Colorado River, Lake Havasu with its boating opportunities and Quartzsite, a haven for the RV set.

Scottsdale

Single Family Home

Peak: July 2006
$658,000

Lowest: July 2011
$410,000

Recent: July 2014
$516,000

Two-Bedroom Condo

Peak: July 2006
$351,000

Lowest: July 2011
$199,000

Recent: July 2014
$237,000

Mesa

Single Family Home

Peak: July 2006
$261,000

Lowest: July 2011
$133,000

Recent: July 2014
$192,000

Two-Bedroom Condo

Peak: July 2006
$183,000

Lowest: July 2011
$82,500

Recent: July 2014
$123,000

Alternative destination

With 350 days of sunshine a year and a passion for both arts and culture, Tucson is becoming popular with snowbirds looking for a more urban environment. Average price for a single family home is in the $140,000 range with two-bedroom condos ringing in as low as $85,000. Median rental rates are $925 a month.

NEXT: HOT REAL ESTATE IN FLORIDA

Florida

It’s no surprise why more Canadians visit Florida than any other U.S. state. In addition to offering everything a snowbird could desire – sun, sand, golf and culture – it’s easily accessible from major Canadian cities. While housing prices have rebounded significantly since the recession, there are still good deals to be had, especially in the northern part of the state. Many of the communities located there have all the requisite amenities, including a mild climate. But because they aren’t traditional destinations, they feel like real communities that snowbirds can enjoy – almost like natives.

West Palm Beach

Single Family Home

Peak: July 2006
$334,000

Lowest: July 2011
$140,000

Recent: July 2014
$202,000

Two-Bedroom Condo

Peak: July 2006
$215,000

Lowest: July 2011
$74,000

Recent: July 2014
$111,000

Fort Lauderdale

Single Family Home

Peak: July 2006
$378,000

Lowest: July 2011
$175,000

Recent: July 2014
$255,000

Two-Bedroom Condo

Peak: July 2006
$379,000

Lowest: July 2011
$183,000

Recent: July 2014
$265,000

Alternative destination

Across the water from the Kennedy Space Center, Titusville bills itself The Gateway to Nature and Space. The city is famed for its nostalgic downtown filled with quirky shops. Home prices run as low as $100,000 with two-bedroom condos averaging just over $50,000. Median rental rate is $750 a month.

 NEXT: HOT REAL ESTATE IN TEXAS

Texas

Texas is RV country, with parks littered throughout the state ranging in size from small to absolutely Texas-size enormous. Many offer a wide range of activities, making them feel more like cities than holiday camps. And Texans love snowbirds so much – they call snowbirds Winter Texans. Winter escapees come for the miles of spectacular white sandy beaches along the Gulf Coast, San Antonio with its beautiful canals, McAllen in the heart of the Rio Grande Valley, the fishing paradise of Port Aransas on the Gulf Coast and, of course, Brownsville with its rich Mexican-American culture.

Corpus Christi

Single Family Home

Peak: July 2006
$211,000

Lowest: July 2011
$159,000

Recent: July 2014
$199,000

Two-Bedroom condo

Oldest Available Data Oct 2008
$149,000

July 2011
$99,900

July 2014
$169,000

San Antonio

Single Family Home

Oldest Available Data Oct 2008
$162,000

July 2011
$155,000

July 2014
$179,000

Two-Bedroom Condo

Oldest Available Data Dec 2008
$92,000

July 2011
$89,900

July 2014
$100,000

Alternative destination

With its balmy climate and proximity to the Gulf Coast, Harlingen is increasingly popular with snowbirds. Median list price for single-family homes was just $139,000 this summer with two-bedroom condos averaging just $77,000. Median rental rate is $847 a month.

 

Zoomer magazine, November 2014