The housing market in Palm Springs has been sustained significantly by Canadians buying second homes during a period when the Loonie was strong relative to the US dollar, oil prices were high and US interest rates were at an all time low.
All of those conditions are changing. The Federal Reserve raised interest rates yesterday, and today the price of oil slumped to a new recent low of $35 a barrel. As a result the Loonie has dropped even further to a new recent low.
The effect of this is that for Canadians looking for a home in the US, the cost has recently risen by close to 30% simply due to the exchange rate change alone - aside from the recent increase in property prices - and Canadians who bought a home during the period of parity between the two currencies can make 30% on their home - again aside from any increase in value over the past couple of years - giving them an incentive to sell, and to sell now, before US interest rates rise further.
On top of that of course, an increase in interest rates will mean that mortgage rates are likely to increase, making it more expensive for Americans to borrow to purchase a home and since the Great Recession, it has become more difficult to qualify for a loan.
Increased supply plus decreased demand lead me to predict that it will take longer to sell a property and that property prices will either stagnate or fall over the next year.
All of those conditions are changing. The Federal Reserve raised interest rates yesterday, and today the price of oil slumped to a new recent low of $35 a barrel. As a result the Loonie has dropped even further to a new recent low.
The effect of this is that for Canadians looking for a home in the US, the cost has recently risen by close to 30% simply due to the exchange rate change alone - aside from the recent increase in property prices - and Canadians who bought a home during the period of parity between the two currencies can make 30% on their home - again aside from any increase in value over the past couple of years - giving them an incentive to sell, and to sell now, before US interest rates rise further.
On top of that of course, an increase in interest rates will mean that mortgage rates are likely to increase, making it more expensive for Americans to borrow to purchase a home and since the Great Recession, it has become more difficult to qualify for a loan.
Increased supply plus decreased demand lead me to predict that it will take longer to sell a property and that property prices will either stagnate or fall over the next year.
