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Canadians Buy Real Estate South of the Border

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Housing remains in a funk.

The Commerce Department reported this morning that sales of new homes had their second-worst month on record in August.

Specifically, last month's new home sales were unchanged from a month earlier at a seasonally adjusted annual sales pace of 288,000. Sales were down by 29% from the same month a year earlier.

But, with regard to the still suffering U.S. housing market, perhaps we can rely on our friends from up North for some much needed help.

USA Today reports that the collapse in housing prices and a strong Canadian dollar are luring north-of-the-border buyers to Arizona and other states where the weather is warm and the housing cheap.

Florida, California and Texas are the top destinations for foreign buyers, but Arizona is gaining.

In fact, Canadians surpassed Californians this year as top out-of-state buyers of Phoenix-area real estate. The Canadian dollar is gaining, up from an average of 80 cents on the U.S. dollar in 2005 to about even this week. At the same time, Phoenix-area home prices have dropped 50% from their peak in early 2007.

Meanwhile, notes Gluskin Sheff’s David Rosenberg, the cranes that dot the Toronto skyline remind him of the late 1980s and there is plenty of anecdotal evidence, he says, that it is American and Asian investors who are coming in and gobbling up these condo units.

“Was this part of the Free Trade Agreement — condo swapping?” asks Rosie.
POSITION:  No positions in stocks mentioned.