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Low loonie causes real estate slump in California

California real estate

Canadians are no longer flocking to California’s sunny Coachella Valley to buy homes since their currency has weakened, and many of those who own properties, are putting them up for sale, real estate experts said.

The change in trend comes with a decline in the Canadian dollar since oil prices have plummeted, according to a report carried by the Desert Sun newspaper on Saturday.

After the 2007 real estate crash in U.S., the Canadian dollar achieved parity with the U.S. dollar, prompting many Canadians to swoop up properties in the region.

Even with the recovery of the U.S. economy, Canadians still made up at least 15 per cent of homebuyers in California’s Coachella Valley, said David Emerson, a local real estate agent.

Now, home prices have fallen in the region, and the number of homes for sale has jumped. Inventory rose by about 25 per cent over the last year, according to the California Desert Association of Realtors.

“Our Canadian buyers are not buying,” Kelly Trembley, a realtor with Bennion Deville Homes, told the newspaper. Kelly said, “This was the perfect storm for the desert, and that’s why our real estate right now is in a bit of a slump”.

Brian and Linda Pahl from Vancouver bought a three-bedroom home in La Quinta more than two years ago for £317,538. Now the couple hopes to sell it for £511,590.

If the Canadian dollar strengthens down the road, however, Brian Pahl said he hasn’t ruled out another purchase.

“With the Canadian dollar being as low as it is, it pays to sell the home and pay the capital gains (tax),” he said. “We can buy again in two years.”

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Paul

The author Paul