This is a follow-up to my April 30th Blog entitled, Canadian Loonie Reaches Parity with Our Greenback, What a Great Time to Buy Real Estate in Palm Springs. At that time, I discussed the fact that the Canadian dollar was reaching parity with the U.S. dollar, and how, it was a very good moment to buy south of the border – the Canadian border, that is!
Well! Okay, the Loonie has recently retreated somewhat due to falling commodity prices, fears of sovereign debt defaults in the Euro-zone, and other factors having little to do with the Loonie’s inherent strength.
So, watch for the Loonie to begin anew its move towards parity, relative to the U.S. dollar. That may take a few months, but as we take the long view of overall financial health of the Canadian financial system vis-a-vis that of the U.S., the Loonie should recover nicely. One important long-term factor will be the ability of the Bank of Canada to raise interest rates before the U.S. Fed can raise them here, at the moment holding back because of continuing high U.S. unemployment.
In any case, some of my Canadian clients, planning to buy real estate in Palm Springs, have recently opened up a U.S. Dollar account in Canada or a U.S. bank account here in the U.S. They are taking these actions now so that the next time the Loonie is at, or near, parity with the U.S. dollar, they will be positioned and ready to take advantage of the translation gains.
A recent MarketWatch column in the Wall Street Journal offers an interesting perspective on Canadians buying in the U.S. real estate market: go to A Great Time to Buy Palm Springs Properties.