Buying in the U.S.? 3 Things You Should Consider Now

February 28th, 2008 Categories: Real Estate Definitions, Vancouver Real Estate

Tom Wright is a Business Development Consultant for HIFX in San Francisco and offers excellent exchange rates. He sent me this article for Canadians thinking of buying in the U.S.

PROCRASTINATORS BEWAREWaiting for a market bottom Could cost you if foreign exchange or interest rates start to move adversely. The latest real estate market headlines are depressing: home prices are down, new-home sales are at record lows, foreclosures are up and credits are harder to get. All this has many buyers sitting on the sidelines, afraid to make a move. But, according to international currency experts, HiFX, waiting for the market bottom may not be the smartest strategy especially if you are an international buyer looking to invest and purchase property in the United States.

Actually, now could be a great time looking to buy and here’s why. Your payments may actually be less today, even if prices fall further in the future.

Assuming a Canadian buyer who’s looking to buy a Condo in Florida priced at $350,000 in USD today and decided to wait for another 6 months because he heard analysts saying that the US real estate market will likely touch bottom towards the end of 2008.

Now let’s look at the monthly payment if we get some possible moves, including further price drops:

BUY NOW WAIT DIFFERENCE Price $350,000 $315,000 10% price drop Interest Rate 5.125% 5.350% 0.225% increase FX Rate US $1.00 US $0.88 12% adverse move(USD per CAD$) Monthly Payment CAD$ 1,429 CAD$ 1,499 5% higher payment(in CAD $)

So even though real estate prices may have dropped an additional 10% from today’s levels, the individual Canadian buyer would be required to make monthly payments that are roughly 5% higher than is the case today. Companies, like HiFX, Inc. can assist buyers “lock-in” today’s attractive foreign exchange rates.

Considering buying abroad? Does this change your mind regarding timing?

Copyright @ HiFX, Inc., a global provider of foreign exchange services to over 30,000 clients per year. Website: HiFX.com