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Canadians Snap Up U.S. Properties

Thomas Beyer

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It takes quite a bit longer these days to get a new mortgage.



So, best to buy in cash (or with a Canadian LOC on a Canadian home) then add a mortgage later.



getting a 65-70% loan-to-value mortgage later is not a problem for Canadians, but not many banks do it.



Contact a mortgage broker that specializes in mortgages for Canadians !



One is here that I have used in the past: http://www.bricksandmortgage.com/services.htm .. there are others, of course.
 

GaryMcGowan

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Is the general consensus for Canadian Investors to invest in the States with all cash purchases? It probably offers an easier transaction and less confusion for the average investor.
 

Rickson9

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[quote user=GaryMcGowan]Is the general consensus for Canadian Investors to invest in the States with all cash purchases? It probably offers an easier transaction and less confusion for the average investor.




I'm not sure what the general consensus is, but it depends on the market and property type. If I had to bet one way or the other, however, I would say "yes".



For the U.S. in general approximately 28% of all transactions are all-cash and a large bulk of all-cash sales are by investors.



This doesn't mean that the remaining 72% of transactions were not by investors, but I would assume that if there were any investors in the remaining 72%, they were either pushed out of the best properties by all-cash offers (... or dealing with much much larger properties, but I'm not sure about this because I have read of huge hedge funds buying distressed boutique hotels, apartment buildings, etc. with all-cash as well).



http://www.propertywire.com/news/north-america/us-real-estate-prices-201210247072.html



And speaking to "depending on the market and property-type", in Miami, for example, nearly 73 percent of nondistressed condo sales, and 76 percent of distressed condo sales, were all-cash.



http://www.nytimes.com/2012/10/14/realestate/big-deal-in-miami-wondering-about-a-bubble.html



Speaking of Miami, my wife and I visited and briefly considered buying just to be able to have a place to stay in Miami, but thought better of it.



As a unrelated aside, now that prices are spiking upwards, the number of investors has significantly diminished leaving locals able to pick up homes. My realtor in Phoenix, is now selling more higher priced homes to non-investor/"typical" buyers.



And as an even more unrelated aside, if the Black Swan of a Canadian economic slow down becomes a reality, it may cause the USD to crush the CAD in the near future. Or not. LOL
 

Thomas Beyer

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[quote user=Rickson9]Black Swan of a Canadian economic slow down becomes a reality,
Why ?



I rather expect the US $ to further deteriorate vs. the Can $, as neither presidential candidate has a proven recipe for debt reduction ! One has proven he couldn't do it the last 4 years (and big government has never worked) and the other wants to reduce taxes.



Without a VAT or GST on the federal level, and elimination of such silly practices as mortgage write-offs for not just one, but two homes, the US will be in debt forever, further deteriorating their currency, like Euro-Land !



Canada, the Switzerland of the Americas !



Invest here at home, and spend your strong currency elsewhere for fun & sun !
 

Darr

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Outlook on currency obviously varies, but essentially, I believe you are both right.

In the short term the USEconomy will show its crack which will drive investors to the perceived safety of the USD as the sole reserve currency (for now). Secondly, Art Carney, our governor of the Bank of Canada is doing just about everything to prevent the cando for appreciating against the peachback. Notwithstanding what you may read in the main stream press, the real reason to suppress the $Can is to prevent the escalation of the price of gas at the US pumps. Canada exports 2.5mil barrels/day to the US which is more than the US imports from Saud and Mexico combined. Any Canadian dollar strength means higher gas prices for US consumers.



Proof:


http://www.eia.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html







He is also on a bond buying binge every Tuesday to further depress rates, the $Can and monetize our fiscal deficit in the process.






Proof:


https://www.google.com/search?hl=en&gl=ca&tbm=nws&q=%22Bank+of+Canada+buys+back%22&oq=%22Bank+of+Canada+buys+back%22&gs_l=news-cc.1.0.43j43i400.1837.1837.0.3003.1.1.0.0.0.0.51.51.1.1.0...0.0...1ac.2.fxqSSrfapBM#q=%22Bank+of+Canada+buys+back%22&hl=en&safe=off&tbo=1&gl=ca&authuser=0&output=search&source=lnt&tbs=qdr:y&sa=X&ei=idKRUOLCIq6GyQHwzICQAw&ved=0CAgQpwUoBQ&bav=on.2,or.r_gc.r_pw.r_qf.&fp=cc508fff56d0de3d&bpcl=37189454&biw=1920&bih=990







In the long term however, global investors will shun the USD as the FED is monetizing in excess of a $Trillion per year. The US is fast approaching the point of no-return where they will be borrowing 40% of their expenditures very soon. Every country in history that has breached this threshold has, without exception, slipped into hyperinflation with a rapid devaluation of their currency.
 

Rickson9

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I say "Black Swan" because nobody expects the USD to do well against the
CAD. If the "smart money" is wrong, then I make a lot of money doing nothing. If
they are right, then I get to buy USD assets on the cheap and make a lot
of money doing something.



I've never really cared about the "why". I just focus on taking advantage of the "when".
 

Darr

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Don't get me wrong, in the short term I also believe the USD will appreciate. The "When" is the real question and when it does depreciate, history has shown that it's fast, violent and will look like a fish line.
 

Rickson9

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The more violent the crash, the better. Stocks, real estate, currencies or whatever your fancy. Nothing beats making money doing nothing.
 

Thomas Beyer

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[quote user=Darr]slipped into hyperinflation


I don't buy that .. currency depreciation: yes .. HYPER inflation like 50% or more a year: no !



The US, unlike Europe, has a LOT of taxation capabilities left: GST/VAT, higher income taxes for upper income earners, less deductions such as mortgage interest, dividends from abroad [Mitt Romney makes money tax free overseas, and then gets paid dividends and pays 15% .. of course the wealthy love that and vote for him ..], gasoline prices are very very low, as are consumer prices.



The US also has huge oil, coal and gas reserves, untapped, and can solve their fiscal quite easily if they really have too.



[quote user=Darr]rapid devaluation of their currency.
Indeed



200 cents US per Can $ in 2022 !
 

Darr

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[quote user=ThomasBeyer]The US, unlike Europe, has a LOT of taxation capabilities left..

200 cents US per Can $ in 2022 !


For one, there's no political courage to implement any major tax reform and two, any such taxation combined would not even make a blip in their revenues which btw, are decreasing while their expenditures are increasing daily. The US may have untapped Nat/Gas but they have oil reserves for a few months only and very little domestic production relative to their consumption. With a 1.5 trillion $ deficit per year and rising, there's no way they can (or would try) to balance their books IMHO. Moreover, I did not say that the US will go into hyperinflation. All I said was that they are fast approaching the point which have invariably sent other countries down that path. Anyways, time will tell and I sincerely hope you're right. However, per your own projection of US$2/Can$1 for 2022, I would like to think that we both agree that the US will undergo severe inflation in the decade to come.
 

Thomas Beyer

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[quote user=Darr]US$2/Can$1 for 2022, I would like to think that we both agree that the US will undergo severe inflation in the decade to come.
That is roughly 7%/year compounded .. high .. but hardly hyper-inflation !



[quote user=Darr]The US may have untapped Nat/Gas but they have oil reserves for a few months only and very little domestic production relative to their consumption.


Not quite. The US is already the world's 3rd largest oil producer. If they switched much of their trucks and heating to natural gas it would lower oil consumption significantly. Couple that with more fuel efficient cars, even with a 20-30% more oil production from fracking or off shore oil .. plus maybe a few million from Canada via Keystone XL .. they'd be oil independent.



[quote user=Darr]With a 1.5 trillion $ deficit per year and rising, there's no way they can (or would try) to balance their books IMHO.
yes, that is a concern, but with rising taxes, military spending cut, and government overhaul even Clinton or Bush in year 1 were able to produce HUGE surpluses !



I'd give it to 2016 .. nothing much will happen under ultra-conservative Romney or big-union-big-government Obama .. both will end up with $20T in debt in 2016 .. then Rubio or C Christy will take care of it !
 

Darr

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[quote user=ThomasBeyer] If they switched much of their trucks and heating to natural gas it would lower oil consumption significantly.


Oh Please! With less than 400 CNG stations in ALL the United States, there`s no infrastructure compared to hundreds of thousand gas stations. Moreover there`s no vehicles per se to choose from even on the design stage. Additionally, do you think the Oil lobby group would allow it?





[quote user=ThomasBeyer].. both will end up with $20T in debt in 2016





The debt is already more than 137 Trillion `right now` when including `promised but unfunded liabilities" such as Social Security, Medicare and Medicaid. That`s a `real` Debt to GDP of 856%.





It`s all right here: http://www.usdebtclock.org/





[quote user=ThomasBeyer].. That is roughly 7%/year compounded...








A `Real` future 7% inflation rate is Pollyanna. Right now, `Real` inflation is 5.75% when calculated according to the methodology used in the pre-Clinton era and 10% when using pre-Reagan methodology. Governments are altering and cooking the numbers to prevent an escalation in entitlement benefits.







It`s right here also: http://www.shadowstats.com/alternate_data/inflation-charts





Even cutting the military spending by half and firing half the federal civil servants will not turn this around. More than 46 Million Americans are on food stamps (SNAP). That`s 15% of their entire population. Most States and thousands of Municipalities are insolvent `Right Now`.



Any cuts, tax increases or money supply tightening will send the USEconomy in a Greater Depression that will make the 30's look like a walk in the park.



The US either has to inflate or default. Either way, the US Dollar will "fish-line" causing massive inflation, even if not deemed hyper.






P.S. Chris Christie will probably die of a coronary prior to 2016. Have you seen this guy?


http://theweek.com/article/index/219806/chris-christie-would-americans-elect-a-fat-president
 

Thomas Beyer

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[quote user=Darr]Chris Christie will probably die of a coronary prior to 2016.
A concern indeed.

[quote user=Darr]Any cuts, tax increases or money supply tightening will send the USEconomy in a Greater Depression that will make the 30's look like a walk in the park.
I doubt it .. they deflate their currency and become a cost effective manufacturing powerhouse again, plus with their oil & gas and COAL reserves they can cut off oil imports.



Why did they run a surplus for 4-6 years under Clinton and Bush ? Because taxes were adequately high, military in check and economy decent. That will happen again. Under Rubio or C Christy (assuming no heart attack). Unlike Europe the US is more nimble if the (blue and red) actors work together.
 

Rickson9

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Buffett Makes A Huge Bet On The U.S. Housing Market



Perhaps the most bullish indicator for U.S. housing is Warren Buffett.



The legendary investor has been buying up real-estate brokerages
around the country as he bets on a housing turnaround. Now, he is
partnering with Brookfield Asset Management, a Canadian real-estate
investor, to more than double the size of his brokerage business.




http://www.businessinsider.com/warren-buffett-brookfield-asset-managment-housing-2012-10
 

Darr

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Buffett is a shrewd portfolio manager. He`s using real estate companies such as United Gypsum (USG) to hedge Berkshire Hathaway's large Reinsurance and Property & Casualty insurance company holdings.
 

Darr

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[quote user=ThomasBeyer] Why did they run a surplus for 4-6 years under Clinton and Bush?


Because debt and debt service payments were low and they were both supported by the longest bull market in history made possible by decreasing bond yields (Greenspan) and off-shoring manufacturing to low wage countries. BTW, Bush ran a huge deficit only to be surpassed by Obama.

About oil reserves: Us domestic production represents only half of consumption according to official Government figures. The truth is probably considerably less. But even so, self reliance will be too painful for gas addicted US consumers. I don`t buy the argument that it can be done because it would have happened already. Moreover, the US would have avoided and saved boatloads of military spending in Iraq, Libya, Afghanistan, Somalia and other oil securing campaigns. Iran's next but may not be possible to steal as it is one of China's large oil suppliers.
 

Thomas Beyer

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[quote user=Darr]BTW, Bush ran a huge deficit only to be surpassed by Obama.
yes towards the end of his first term and certainly second term due to 9/11 induced huge military spending, 2 wars (Iraq & Afghanistan) and huge tax cuts. hence, Romney's plan is not credible. But neither is Obama's.



As stated US will muddle through and dig out, with tax hikes and spending cuts, and population growth and in-migration, unlike the S-Europeans without productive immigration, with their bloated welfare states and huge debts, and no room to increase taxes anymore !
 

bizaro86

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[quote user=Darr]About oil reserves: Us domestic production represents only half of consumption according to official Government figures. The truth is probably considerably less. But even so, self reliance will be too painful for gas addicted US consumers. I don`t buy the argument that it can be done because it would have happened already. Moreover, the US would have avoided and saved boatloads of military spending in Iraq, Libya, Afghanistan, Somalia and other oil securing campaigns. Iran's next but may not be possible to steal as it is one of China's large oil suppliers.




The US may not become completely self sufficient, but oil imports to the US have been decreasing and will continue to decrease. Evidence this has happened is here: http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_epc0_im0_mbblpd_a.htm.



The EIA reports the US imported 8.9 million bbl/d during 2011, down from 10.1 million bbl/d during 2006. At $80 oil that's a 35 billion dollar a year difference to the US balance of payments. And that import figure includes the oil they've recently started importing, refining, and selling for a profit, so the actual change in oil imported for domestic use is even greater. The US formerly imported nearly 3 million barrels a day of refined products, and now exports over a half million per day, which is around a 100 billion dollar difference in the balance of payments. http://www.econbrowser.com/archives/2011/12/us_net_exports.html



The biggest reason for this is technology. The US has begun to use horizontal wells and multi stage frac'ing to open up huge amounts of tight oil. There is every indication US oil production will continue to increase.



As to the geopolitical, the US doesn't need to fight wars for oil, certainly not now, if they ever did. Canada is the largest supplier of oil to the US. They imported more oil from us than the entire Persian Gulf combined. You also mentioned Libya, and they import such a small amount of oil from there it's inconsequential, it's been less than 100 mbopd for years. Neither Afghanistan nor Somalia export oil to the US, if they do at all.



There is a bit of a case for Iraq, which is the 6th largest exporter of oil to the US, accounting for about 5% of their imports, just ahead of Columbia and Angola.



Regards,



Michael
 

Darr

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Hi Michael- what took you so long in joining this thread? :) I refer to the EIA`s website quite a bit where I have hyperlinked it a few posts ago (going back 5) on this discussion thread. I agree that some of the smaller oil producing nation mentioned may not export as much to the US (Libya being a case in point), but does supply its European or other allies.



http://petroleuminsights.blogspot.ca/2012/09/us-crude-oil-imports-from-top-15.html#.UJLV0Ya8Bp5




The original topic was the impact of inflation and the USD on US Real Estate but it developed a life of its own as some posts tend to do on occasion. On that note, I would be very interested to read your views on Iran's oil before going back to the heart of the topic.
 
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