Cold winters have you wanting to head south? Some investors are downsizing here to take advantage of the U.S. real estate meltdown in some hot locations.
David Russell lives in a spectacular Vancouver penthouse condo. It has a multi-million dollar view and a 1.8 million dollar price tag. So why is he selling?
"I'm thinking of taking advantage of the price increases in Vancouver real estate and this property that I'm selling here and sort of splitting in two," David explains.
That means buying a smaller place here and using the extra cash to fulfill a lifelong dream of owning a winter home in Palm Springs, California.
David's dream is closer to reality because of the U.S. housing crisis. In the Palm Springs area, some 6,000 homes are in foreclosure and properties aren't selling
"There's no energy. I hate to say it, but you can kind of feel the desperation," he confides.
And it's not just Palm Springs. Phoenix, Arizona has had a 900 per cent increase in houses for sale and that's putting downward pressure on prices
For over a year, David has been book-marking properties for sale on the Internet and watching prices fall.
"There it had dropped about a third to 40 per cent from its listing price," he notes.
Sounds good -- but a word of caution:
"Let's not make a mistake that some of the Americans have done," warns Vancouver real estate agent Spice Lucks. She says the mistake is to borrow money against the equity in your main home to invest in a recreational market like Palm Springs. It can leave you in a position where you are overextended
"When you push yourself beyond perceivable limits the pendulum tends to swing back and hit you in the head," she warns.
David wants to see the market bottom before he jumps in
"There is nothing wrong with buying property on the way back up again. 'Cause at least you know you've hit the bottom," he says.
And when he's ready to buy, he has a plan.
"The bottom line is a buyer comes to town and they have the money, they'll all be jumping for that buyer to see if they can sell their place, and they may be willing to take quite a discount from what they are asking at that time," he predicts.
Before buying down south, investigate tax implications such as capital gains when you sell it. And if you rent it out, you must file an American tax return every year even if you are declaring a rental loss.
With a report from CTV British Columbia's Chris Olsen
