Calif. condos go to Canadians

Real estate agents tap new market created by strengthened Canadian dollar

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December 27, 2007|By Peter Y. Hong | Peter Y. Hong,Los Angeles Times

Doug Morrison saw the snow outside his Edmonton, Alberta, bedroom window one recent morning and knew this was the time. Three hours later, he was on a plane to Palm Springs, Calif.

By lunchtime, the 49-year-old Canadian bureaucrat was checking out a two-bedroom condominium on a golf course, priced to sell at $322,500. Later that afternoon, Morrison pondered the deal as he dined in shirtsleeves at a sidewalk table.

"There's Christmas music and it's 70 degrees," he said as music played softly from the restaurant's speakers. By the time he flew home that evening, Morrison said he was leaning toward making an offer on the condo.

Cold-weary Canadians have long flocked south for the winter. But they now have a powerful incentive: a favorable exchange rate that put the Canadian dollar at a 30-year high against the dollar.

In states such as Michigan and Montana, that has meant Canadians sweeping across the border to snap up consumer goods including clothes and cars. And in the snowbird haven of Palm Springs, it's given a glimmer of hope to real estate agents suffering from the slowdown in housing sales.

"Canadian buyers are not sitting on the sidelines," said Billy D. Lewis, the Coldwell Banker agent who showed Morrison the golf course condo.

Lewis and other agents say inquiries began picking up sharply in October as the Canadian dollar - nicknamed the "loonie" for its depiction of a loon on the country's $1 coin - shot up in value against the U.S. greenback.

At Prudential California Realty's office in Rancho Mirage, Calif., 15 of the 40 agents are working with Canadian buyers, said agent Judy Zeigler. She said the office's Canadian clientele had doubled from a year ago.

So far, there has been just a modest increase in sales to Canadians, agents say - maybe three or four a month at Coldwell Banker's brokerage in Palm Desert, Calif., from about one a month a year earlier. But Ron Gerlich, who heads the office, expects that number to double or triple in January, when real estate sales tend to pick up.

To help spur interest, Lewis has taken out ads in Canadian newspapers, promoting the Palm Springs area as a golfing attraction.

"Park Your Loonies, Play Some Golf," the ad says. It steers Canadians to Lewis' Web site, where they now account for about half the traffic on the site, compared with 15 percent a year ago.

Lewis says he has sold four properties to Canadian buyers since October, and he is working with 17 more who say they are seriously considering buying when they make their vacation visits in coming weeks.

Such purchases would be welcome business to the local real estate industry. Home sales are down nearly 20 percent in the Palm Springs area, according to DataQuick Information Services, with a similar decline in home values in many neighborhoods. Many local buyers are firmly on the sidelines, believing that prices may fall further.

But bargain-hunters such as Morrison are worried that they may miss a historic combination: low real estate prices and high spending power.

"If the [Canadian] dollar goes 10 percent the other way, that's a lot of money on a $300,000 purchase," said Morrison, who heads the land-title division of the provincial government of Alberta.

This month, Morrison flew to Montana to buy a sport utility vehicle. He had to drive 600 miles to get home, but he said the trip saved him $9,000 on the purchase price.

Such efforts have helped give Canadians a reputation for being thrifty.

"We're probably more price conscious," said Christopher Wolthers, 54, of British Columbia. "It's in our nature to be frugal and look for buys and coupons."

Such frugality, he said, was required for many years by the weak Canadian dollar. But with the loonie now flying high, Wolthers and his wife, Noreen, recently bought a one-bedroom condo in Rancho Mirage.

The $185,000 price looked even better compared with vacation homes in Canada, which have skyrocketed in price amid a Canadian real estate boom, he said.

"A comparable property here would be at least $300,000," said Wolthers, who lives in the pricey Okanagan resort region east of Vancouver.

Connie Kashkawol, the Woltherses' agent, said their Rancho Mirage retreat probably would have sold for $210,000 at the market's height two years ago.

The Woltherses plan to stay in the condo for a few weeks a year until they retire, when they may live there year-round. The rest of the time, they plan to rent the place out - to fellow Canadians.

After placing an ad in three Canadian newspapers, Wolthers said, he quickly rented his new condo from January through March for $2,000 a month.

"The response was absolutely incredible," he said, crediting the loonie's near parity with the dollar. "Anything close to par is seen here psychologically as a wonderful thing."

Peter Hong writes for the Los Angeles Times.

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