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As loonie surges, Canadians snap up US homes

December 18th, 2007 10:05 AM

As loonie surges, Canadians snap up US homes

Snowbirds bring checkbooks to grab properties at deep discount

The Associated Press

updated 1:00 p.m. MT, Fri., Dec. 14, 2007

CHANDLER, Ariz. - Two hours after his flight landed in Phoenix, Calgary resident Doug Farley already was cruising the city's vast stuccoed suburbs in search of the one attraction Canadians cannot seem to get enough of these days: cheap homes.

There are thousands of them here: almost new, unoccupied and dropping in value. The mortgage meltdown, combined with a surging Canadian currency, has Farley — and many of his countrymen — dreaming of winter golf on grass that's always green.

"My dollar's the same as your dollar, finally," Farley said, grinning as he peered through a pool fence at a sparsely populated condominium complex in Chandler, a Phoenix suburb.

For moderate-income Canadians like Farley, the race is on to take advantage of the "loonie," which in September reached parity with the U.S. dollar for the first time since 1976. Many are combing the Internet for anxious American home sellers and looking with an investor's eye at the condos they rented while on vacation in sunbelt states.

"Now it's more than just the snowbird coming down and staying in a condo. It's people looking for business opportunity," said Frank Nero, president of the Beacon Council, Miami-Dade County's economic development arm in south Florida.

Canadian condo-builder Solterra Group of Companies also is riding the surge in the Canadian economy as it plans to snatch large chunks of land in Las Vegas. Michael Bosa, the company's vice president for development and acquisition, said the loonie has bolstered his company's bids.

"We're looking now aggressively," Bosa said. "We think we'll see more opportunities in the next six to eight months."

In Arizona, Jason Sirockman of Edmonton, Alberta, said he watched as home owners flooded the market with 58,000 homes, more than twice the amount in 2005 when home values peaked.

Now is the time to buy, he said. Alberta, a three-and-a-half-hour flight from Phoenix, is experiencing a modern-day gold rush from booming work in its vast oil sands.

"Fifteen of my friends are on buying trips down here, and we're all cheap," Sirockman said. He brought his family to Scottsdale this month while he submitted a lowball all-cash offer for a three-bedroom home.

"I don't want to take advantage of a guy who's having trouble in the market and is losing his shorts," Sirockman said. "But I have no problem with a guy from California who bought on spec and has five houses in Arizona and never lived in them."

Single-family homes and condos in the Phoenix metro area now sit an average of 99 days before getting sold. That's three times the wait for homes and four times the wait for condos compared with two years ago, according to the Arizona Regional Multiple Listing Service.

The market has shifted totally in the buyer's favor, especially those offering cash, said Jeff Russell of Alberta. Last month, Russell snapped up a patio home next to a golf course in Scottsdale with a $299,000 check. It was listed at $463,000.

"I was actually going to come down here and buy a seven-series BMW because cars are ridiculously cheap here," he said. "But I discovered that, forget cars, houses are on deep discount. I could never get anything on a golf course as nice in Canada for this type of money."

Real estate agents in Phoenix, especially those with Canadian ties, are hustling to reach potential buyers up north while the American housing market and the U.S. dollar continue to slump.

Rick Morielli, a former real estate broker from Toronto, received his green card in November, posted a Canadian realty Web site, took out some newspaper ads in Canada, and already he has about a dozen clients looking for homes.

"There's a real 'Wow' factor here for Canadians," said Morielli, who now lives in Phoenix.

"When I take them to a brand new subdivision, and for $210,000 can get them four bedrooms, 2,000 square feet, all appliances, brand new, that's something they haven't been able to buy in Canada for 10 or 15 years. In my opinion, everyone should be buying now."

Mark Dziedzic, a former financial planner from Toronto, now sells homes full time in Arizona and holds seminars in Canada to push the American housing market on fellow Canucks. Dziedzic said he's had to hire more staff at his office to keep up with the influx of Canadian investors.

"When (the Canadian dollar) hit a dollar ten, it really created a real buzz for Canadians, not only those looking to buy second homes but we're also seeing it from buying purely from an investment standpoint," Dziedzic said.

Still, with so many homes on the market, the interest by Canadians isn't about to fix the housing slump in Arizona, real estate consultant Elliott D. Pollack said.

"You have a massive oversupply in the face of a lower demand," Pollack said. "And you're going to have to work off those excess units. And to do that you'll need two or three years."

URL: http://www.msnbc.msn.com/id/22262472/from/ET/

Posted by AJ JOHNSON on December 18th, 2007 10:05 AMPost a Comment (0)

WASHINGTON (AP) - President Bush acknowledges it's "no perfect solution." Treasury Secretary Henry Paulson says it's "no silver bullet."

December 7th, 2007 12:16 PM

WASHINGTON (AP) - President Bush acknowledges it's "no perfect solution." Treasury Secretary Henry Paulson says it's "no silver bullet."

The plan negotiated by the Bush administration to freeze the low introductory rates on subprime home loans appears likely to help only a fraction of the homeowners who face huge jumps in their mortgage payments.

After that, they could be in the same position again.

Homeowners dialing up their mortgage company to get their current rate frozen could be disappointed. The White House plan doesn't force mortgage companies to give eligible homeowners a break. It is voluntary.

President Bush, announcing the initiative Thursday, said 1.2 million homeowners could be eligible for relief, which includes the rate freeze and helping people refinance into more affordable mortgages. The Center for Responsible Lending, a group that promotes homeownership and works to curb predatory lending, estimates that only 145,000 households will qualify for the rate freeze. The criteria is too strict, the group says.

The White House plan is aimed at stemming foreclosures that have shot up to record highs as the housing market has gone from boom to bust.

Subprime borrowers - those with tarnished credit or low incomes - have been hardest hit by the meltdown. Initially low interest rates that reset to much higher rates have clobbered those borrowers. Nearly 2 million adjustable-rate subprime mortgages will reset from introductory rates of around 7 percent to 8 percent to much higher rates this year and next, raising the specter of even more people being forced out of their homes because they cannot keep up with their monthly payments.

Rising home foreclosures are a headache for politicians and a danger for the economy.

The White House's plan aims to curb future foreclosures but there are questions about how effective it will prove to be.

The rate freeze offer would be available only to people who have not missed any mortgage payments at their introductory interest rate. It also would apply only to loans taken out between 2005 and July 31, 2007 and are scheduled for rate boosts between Jan. 1 , 2008 and July 31, 2010. To ensure that speculators don't get the break, the rate freeze offer applies only to people living in their homes.

With these restrictions, 49-year-old Debra Spriggs of Grand Blanc Township, Mich., a single mother of six, hopes she can benefit from the Bush plan but isn't sure if it will apply to her.

The retired General Motors Corp. worker said she pays nearly $3,000 a month for her mortgage, including interest and late fees, after missing one payment and renegotiating with her lender.

"It's scaring me to death," said Spriggs, whose children include two with special needs. "I want to do what I need to do so I can get back to where I've been," she said. "I'm praying this market turns around so I can get some refinancing."

The idea behind the administration-negotiated plan is that the five-year freeze will buy time for housing sales and prices to start rising again. Such a rebound would enable homeowners to refinance their current adjustable rate mortgages into fixed-rate loans with more affordable monthly payments. But some people who want to buy homes and have been priced out of the market are upset there's no help in sight for them.

Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee who is vying for his party's presidential nomination, complains that the White House plan amounts to "little more than financial wallpaper."

Dodd said the criteria by which distressed homeowners are eligible for relief "shuts out hundreds of thousands of borrowers who are either in, or shortly will be facing, default in 2007 because of the abusive exploding adjustable-rate mortgage loans they were sold."

Of the nearly 3 million subprime adjustable-rate loans surveyed by the Mortgage Bankers Association in the third quarter, a record 4.72 percent of them entered the foreclosure process during that period. At the same time, a record 18.81 percent of the subprime adjustable-rate loans were past due.

A call was placed to the hot line set up to help distraught borrowers - 1-888-995-HOPE - to find out how to take advantage of the 5-year rate freeze. The caller was advised that "the criteria for that is going to be pretty slim" and that there are "lots of hoops to jump through."

Meanwhile, there's still the possibility that investors, who were counting on bigger returns from the higher rate resets, will balk at extending the duration of the lower rate.

George Miller, executive director of the American Securitization Forum, whose members include investors, ratings agencies and other financial players, backed the White House's effort and developed streamlined procedures for lenders to follow when sorting through borrowers' requests for relief. He was hopeful lawsuits could be avoided but he struck a note of caution.

"Certainly, there is no complete insulation from legal exposure," Miller said.

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EDITOR'S NOTE - Jeannine Aversa has covered economics for The Associated Press since 1999. Business Writer Jeff Karoub contributed to this report from Detroit.

Posted by AJ JOHNSON on December 7th, 2007 12:16 PMPost a Comment (0)