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September, 2012, Page 40
Illustration by Nicole Roegner
Canadian homebuyers helped stabilize Valley real estate during its darkest hour. Now leave some for us, eh?
Two summers ago – during the nadir of Arizona’s real estate fortunes – USA Today ran a story under the headline “Canadians Become Top Out-of-State Homebuyers in Arizona.” The article described how Canadian snowbirds, lured by warm winters and a generous exchange rate, were starting to outpace pack-leading California buyers in snapping up bargain-basement Arizona homes – a trend that held through this spring.
Now that the Valley’s strung-out real estate market appears in remission – the median sales price of a home in the region is up 32 percent since May 2011, according to an ASU study – grateful Valley homeowners might ask: Should we thank the Canucks? And can we expect more of the same?
Michael Orr says yes on both counts. Though he credits much of the recent bump to hedge-fund investments at foreclosure auctions, Orr – the director of the Center for Real Estate Theory and Practice at Arizona State University’s W.P. Carey School of Business – predicts that Canadians will continue making a sizable impact on the market as long as their currency trades on par with the dollar. “The Canadians kept our market good when nobody wanted to invest here,” Orr says. “In Canada they didn’t have a bubble, so Phoenix is still ridiculously cheap. It’s like a third world country to them.”
A third world country, that is, with dozens of golf courses and four major sports teams. “Heat maps,” used by analysts and agents to reveal an area’s most popular neighborhoods, show that Canadian buyers tend to migrate toward self-contained golf communities with close access to mountains. “They love new, clean, and safe. Scottsdale is a brand name to them,” Scottsdale-based real estate broker Erik Walbot of The Walbot Group says. As such, many Canadians shy away from Downtown and flock to more remote areas like Florence, Maricopa, DC Ranch, or Mesa’s Mountain Bridge – which is, astonishingly, a quarter-owned by Canadians, according to Orr’s findings.
“We’re down here to be on vacation, so I don’t think there’s a desire to be smack in the middle of the city center, even though we like to take advantage of what the city offers,” says Sue Ann Valentine, a Calgary-based real estate agent who winters in the Valley. She purchased a home in DC Ranch two years ago after vacationing at a friend’s place near Kierland, and now has roughly 50 friends from Calgary who own second residences nearby.
With three nonstop flights to Calgary per day, Phoenix has become to western Canadians what San Diego is to Phoenicians: a sort of seasonal Riviera. “It’s a safety in numbers thing. They’ll come into a community and they’ll have a certain comfort level based on friends and referrals,” says Don Matheson, Valentine’s broker and a fellow Calgarian. He travels up north as many as eight times a year to give iPad presentations about the intricacies of foreclosures and short sales to Alberta’s growing community of nouveau riche oil and financial services execs looking to park their newly powerful Canadian dollars in stable investments.
The Canada-Arizona investment pipeline has helped sustain many Valley brokers who saw the opportunity early in the real estate crisis. Walbot says Canadians now represent 30 percent of his sales. Such figures have given rise to several Canada-catering firms: Arizona for Canadians, Condos for Canadians, Scottsdale for Canadians.
Currently, Canadians account for 4 percent of all closings in metro Phoenix, and “that alone is making prices rise significantly,” Marina Villaescusa, a broker at Walbot Group, says. And though their hard-earned Canadian dollars are far less toxic than the financing schemes that fueled the Valley’s doomed speculation market, regular mortgage-backed Arizonans can be outmatched. “[Canadians] usually buy with cash,” Villaescusa says. “And it takes all the other buyers out of the equation.”
Real Estate Reality TV
Last winter, Discovery Channel camera crews descended on Phoenix to film what some have called a “gambler’s paradise”: the world of foreclosure auctions. Trailing four teams of buyers and “drivers” (the operatives who scope out distressed properties), the show – called Betting the House – blends the intrigue of Gold Rush with the high-stakes treasure hunting of Storage Wars, tallying wins and losses with a post-auction scorecard. “It’s high stakes gambling, and there are many ups and downs in each show,” says producer Matt Sharp, who also scouted auctions in California, Nevada and Florida before settling on the Valley. “Phoenix is one of the largest and most competitive markets, and we found a lot of unlikely characters.” Though the show’s six-week run ended in mid-August, it could be renewed for a full season if the ratings are solid.
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