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Palm Springs or Canada in the winter? Hmm, eh?

The weak U.S. dollar is drawing more home buyers from the north.

December 05, 2007|Peter Y. Hong | Times Staff Writer

Doug Morrison saw the snow outside his Edmonton, Canada, bedroom window one morning last week and knew this was the time. Three hours later, he was on a plane to Palm Springs.

By lunchtime, the 49-year-old Canadian bureaucrat was checking out a two-bedroom condominium on a golf course, priced to sell at $322,500. Later that afternoon, Morrison pondered the deal as he dined at a sidewalk table in his shirt sleeves.

"There's Christmas music and it's 70 degrees," he said as carols played softly from the restaurant's speakers. By the time he flew home that evening, Morrison said he was leaning toward making an offer on the condo.

Cold-weary Canadians have long flocked south for the winter. But they've had a powerful added incentive in recent weeks: a favorable exchange rate that last month put the Canadian dollar at a 30-year high against the dollar.

In states such as Michigan and Montana, that has meant Canadians sweeping across the border to snap up consumer goods including clothes and cars. And in the snowbird haven of Palm Springs, it's given a glimmer of hope to real estate agents suffering from the slowdown in housing sales.

"We are short on buyers," said Billy D. Lewis, the agent with Coldwell Banker in Indian Wells who showed Morrison the golf course condo last week. "Canadian buyers are not sitting on the sidelines."

Canadian tourists have long been a mainstay in the Palm Springs area, so much so that staffers at the Canadian consulate in Los Angeles quip that their citizens seem to triple the desert town's population each winter.

The difference now is that instead of looking to rent vacation quarters, many are looking to buy. Lewis and other agents say inquiries began picking up sharply in October as the Canadian dollar -- nicknamed the "loonie" for its depiction of a loon -- shot up in value against the U.S. greenback.

At Prudential California Realty's office in Rancho Mirage, 15 of the 40 agents are working with Canadian buyers, said agent Judy Zeigler. She said the office's Canadian clientele had doubled from a year ago.

So far, there has been just a modest increase in actual sales to Canadians, agents say -- maybe three or four a month at Coldwell Banker's Palm Desert brokerage, from about one a month a year earlier. But Ron Gerlich, who heads the office, expects that number to double or triple in January, when real estate sales tend to pick up.

To help spur interest, Lewis has taken out ads in Canadian newspapers, promoting the Palm Springs area as a golfing mecca.

"Park Your Loonies, Play Some Golf," the ad says. It steers Canadians to Lewis' website, where they now account for about half the traffic on the site compared with 15% a year ago.

Lewis says he has sold four properties to Canadian buyers since October, and he is working with 17 more who say they are seriously considering buying when they make their vacation visits in coming weeks.

Such purchases would be welcome business to the local real estate industry. Home sales are down nearly 20% in the Palm Springs area, according to DataQuick Information Services, with a similar decline in home values in many neighborhoods. Many local buyers are firmly on the sidelines, believing that prices may fall further.

But for Canadians, the buy-or-not-to-buy decision is more complex. Home values may fall further, but so too could the value of their currency. The U.S. dollar, which was worth 92 cents against the loonie Nov. 6, has regained ground in recent weeks and is now roughly even with its Canadian counterpart.

Many Canadians still consider that a good deal; five years ago, it took $1.60 of their money to equal the U.S. dollar. But bargain-hunters such as Morrison are worried that they may miss a historic combination: low real estate prices and high spending power.

"If the [Canadian] dollar goes 10% the other way, that's a lot of money on a $300,000 purchase," said Morrison, who heads the land title division of the provincial government of Alberta.

Earlier this month, Morrison flew to Montana to buy a Hyundai Veracruz sport utility vehicle. He had to drive 600 miles to get home, but he said the trip saved him $9,000 on the purchase price.

Such efforts have helped give Canadians a reputation for being thrifty.

"We're probably more price conscious," said Christopher Wolthers, 54, of British Columbia. "It's in our nature to be frugal and look for buys and coupons."

Such frugality, he said, was mandated for many years by the weak Canadian dollar. But with the loonie now flying high, Wolthers and his wife, Noreen, recently bought a one-bedroom condo in Rancho Mirage.

The $185,000 price looked even better compared with vacation homes in Canada, which have skyrocketed in price amid a Canadian real estate boom, he said.

"A comparable property here would be at least $300,000," said Wolthers, who lives in the pricey Okanagan resort region east of Vancouver.

Connie Kashkawol, the Wolthers' agent, said their Rancho Mirage retreat would probably have sold for $210,000 at the market's height two years ago.

The Woltherses plan to stay in the condo for a few weeks a year until they retire, when they may live there year-round. The rest of the time, they plan to rent the place out -- to fellow Canadians, of course.

After placing an ad in three Canadian newspapers, Wolthers said, he quickly rented his new condo from January through March for $2,000 a month.

"The response was absolutely incredible," he said, crediting the loonie's near parity with the dollar. "Anything close to par is seen here psychologically as a wonderful thing. That's why they're flocking over."

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