When Mark Dziedzic made the move from Toronto to Arizona two years ago, he already knew the attraction of the American sun belt to Canadians weary of being snowbound.

But bolstered by the downtrodden U.S. real estate market and the suddenly strong Canadian dollar, the trend of snowbirds snatching up properties south of the border is intensifying dramatically, he says.

“Since October and November of last year, half of our buyers are from Canada,” says Dziedzic, a former financial planner who now heads the real estate firm, Arizona for Canadians. “Builders say the majority of the them are from Alberta — and they only see that trend continue to grow.”

But officials in the cross-border real estate industry say potential buyers need to know what they are doing before dropping cash on that dream condo in Florida, or golf villa in Arizona.

Not that Canadian buyers shouldn’t be enticed by the price tags.

The S&P/Case-Shiller Index, which tracks the average home prices in 20 American cities, dropped for the 22nd straight month in May. Sun-belt cities like Las Vegas, Phoenix and Miami all saw their average prices shrink by more than 25 per cent in the last year.

The falling prices are what allows firms like Calgary-based Lucid Group to offer opportunities such as the Sunrise Palms condos in St. Petersburg, Fla., where some of the 240 units were priced below $75,000.

Lucid bought the property from the original developer for a good value after St. Petersburg’s housing bubble burst, says Adam Dryborough, a partner in the Calgary company.

“A lot of people say that they missed the bubble and they missed the boat to make money,” he says. “But this is another chance to get on the boat.”

The units priced at $74,500 quickly sold out, says Dryborough.

Michael MacKenzie, director of communications with the Canadian Snowbird Association, says the group has been hearing of a rising number of questions from its 70,000 members about buying real estate in the U.S.

“Questions about property taxes are the big ones,” MacKenzie says, adding that Florida remains the biggest destination, with an estimated 75 per cent of the group’s membership bound for the Sunshine State.

But those interested in Florida properties need to know about the costs, MacKenzie says, because the state charges non-residents much more in property taxes.

“In some cases, we’ve seen Canadians put down so much on a condo,” MacKenzie says. “They would have the exact same unit as their neighbours, and (the Canadians’ tax burden) being twice to three times more isn’t uncommon.”

In Arizona, that’s less of an issue, says Dziedzic.

But he agrees that Canadians first need to know the tax implications of buying south of the border.

For example, if the property is used for investment purposes and rented out, the buyers have to get a tax identification number for the U.S. and file a non-resident income statement, he says.

If the buyers don’t, they could be subject to a 30-per-cent withholding tax, he says.

Other things to look out for, says Dziedzic, include required homeowners association payments for some properties, spousal stakes in the purchase (because American gifting laws differ from Canadian ones) and whether a bank has officially taken control of the property if it is foreclosed.

Owners in Arizona should also check if the property is in a flood zone, says Dziedzic. “Always get a home inspection,” he says.

MacKenzie says Canadians also occasionally forget about the U.S. being a different country when making that southward move.

“Without paperwork, you can stay in the U.S. for six months out of 12,” he says.

“If you decide to stay an extra month, you could be denied entry the next time. We’ve heard of people getting multi-year bans.”

But despite the obstacles, Canadians continue to inquire about sun destinations in the U.S., says Dryborough.

That makes perfect investment sense, he says.

“(John D.) Rockefeller said the best time to buy is when there is blood on the streets,” he says.

“In Calgary, the economy is still booming and people can take advantage of the fact that (St. Petersburg) can’t really support their surplus housing right now.

“There’s a lot of sensationalism dealing with the fallout of the bad mortgages, but there hasn’t been a continuation of that bad lending. St. Pete looks like it has bottomed out.”

Dziedzic’s firm in Arizona now has 2,500 Canadians in its database and he says he understands the investment potential.

“In the last couple of months, we’ve really seen the investment side of things pick up,” says Dziedzic. “Are we at the (price) bottom yet? That’s a fair question, and, no, we’re probably not. But there are opportunities out there. You can be patient, but just be mindful.”

Beyond the investment aspect, buying in the sun belt simply makes too much sense for many Canadians, and the reason isn’t hard to find, he says.

“When you go to bed, your chance at getting up to sunshine is as close to 100 per cent as it gets,” says Dziedzic.

“You can come down here and, instead of shovelling snow, enjoy being outside.”

Credits: Canada.com

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