With Arizona’s 300-plus days of sunshine, it’s easy to see the attraction for our Canadian neighbors to the north.
If you are one of the estimated 21,000 Canadians living in the Phoenix Metro area and happened to purchase a home in Arizona following the “crash,” you are doing pretty well with your Arizona investment.
Between your 26% return on the USD/CAD and the 132% gain in home price, most Canadians who purchased a home in 2013 are set to turn a handsome profit if they were to sell that home in today’s market.
For example: In 2013, if a Canadian purchased a $250,000 USD home in the Phoenix Metro area it actually cost them $254,850 CAD thanks to the foreign currency exchange rate of $1.02 USD/CAD at that time. Phoenix has rebounded considerably from the “crash” and that same house today should be valued about
$581,081 USD thanks to a median home sales price increase of 132% from 2013 to 2022.
In addition to making a nice profit on the home value, the Canadian homeowner also benefits from a strengthening U.S. dollar, which now trades about $1.28 USD/CAD. That $581,081 USD when converted back into Canadian dollars comes to approximately $743,900 CAD. Assuming the home was purchased with cash and excluding all applicable taxes and fees that’s a total return on investment of 192%. Impressive.
Now, going forward what do you do? Is it time to cash out? Should you downsize? Is it worth trying to find another property? There is no one answer for everyone as each situation is different and every person’s situation is different. What are your goals? There’s an old adage that says “pigs get fat and hogs get slaughtered.”
The basic economic theory of investing is “Risk vs Return.” In general, most real estate economists believe that home prices will continue to grow albeit at a slower pace that the recent past.
If this suits your goals and is an acceptable risk then continue to hold onto your property but if you believe that there is too much uncertainty in today’s global economic conditions then maybe it’s a good time to sell.
Discuss your real estate and financial goals with your professional team and feel free to contact me with any real estate questions or concerns. Whichever you decide, you should be very proud of your investment.
Editor’s Note: Mike Zschunke is a Scottsdale-based associate broker and real estate advisor with Berkshire Hathaway HomeServices Arizona Properties.
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