Now just might be the time to buy that vacation dream home south
of the 49th parallel.

The loonie is still within sight of par, taking the bite out of the currency transaction.

Add to that glimmers of hope for a turnaround in the killing field of U.S. real estate,

where the average house price dropped 34 per cent from its peak in 2006, and you

have a situation that may not come around again for many years — if ever.

Americans still feel pretty grim about their economy, spending and income.

June marked the fourth month in a row that consumer confidence has fallen,

according to the U.S. Conference Board.

Despite that, house prices are not only firming up but rising in 19 of the 20 cities

that comprise the S&P/Case-Shiller composite index. The index gained 1.3

per cent in April, the most recently reported month.

Canadians have become accustomed to a real estate market that has been attached

to a balloon. A monthly gain of 1.3 per cent doesn’t even seem worth talking about.

However, what it may signal in the U.S. is not so much a market poised to boom but

one that is no longer bust.

“The key point here is that the price collapse is over and potential homebuyers

need not be put off now by the prospect of big capital loss,” said Ian Shepherdson,

chief economist at High Frequency Economics in a note to clients that was reported

by MarketWatch’s Washington bureau chief Steve Goldstein.

Canadians are attracted to the south and winter escape states such as Florida, Arizona,

Nevada and California, among the hardest hit during the Great Recession. The major cities

in all states posted gains. They were led by Phoenix where prices rose 2.5 per cent in

April and 8.6 since April 2011. (There have even been bidding wars on some Phoenix properties.)

Before you get out your chequebook, pause and consider these six tips for buying U.S. property.

1. Don’t rush: The market may well have bottomed out but there are foreclosures galore

clogging up the system. Depending on how they hit the market they can have a big impact

on house prices. Also, many areas were still in the negative during the past 12 months.

In the foreclosure capital of Las Vegas, prices inched up in April but are still down nearly

six per cent compared to last year.

2. Rent first: Unless you vacation frequently where you want to buy, try renting.

A hotel stay doesn’t give you the same feel for a city or community as living in a condo or house.

Also neighbours are great sources of information. For instance, when Winnipeggers Charlaine and Jason

Horne zeroed in on dirt-cheap Spring Hill, 45 minutes north of Tampa, they rented for two weeks.

“We were looking at nice three-bedroom ranchers with pools going for $60,000. Then I heard about

all the sinkholes in the area from a neighbour. We’re thinking about something closer to Orlando now.”

3. Run the numbers: Many Canadians finance U.S. home purchases with a home equity line of credit.

Ensure you can afford the payments based on higher interest rates that will likely come sometime

before 2014. And while you’re at it put together a budget for your expenses in the U.S. Can you

handle the costs if the dollar drops to 90 cents against the greenback? In the past six years alone

the loonie has ranged between 62 cents and $1.07 vis-a-vis the U.S. dollar.

4. Get tax advice: This is important if you intend to buy a vacation rental. Over the last couple of years

the Internal Revenue Service has ramped up its interest in foreigners who earn income but don’t

submit tax returns. There are many accountants who specialize in tax advice for Canadians with U.S.

investments and income.

5. Check the homeowners association: Homeowners associations across America are struggling because

condo fees are in arrears. You may get a great deal but be saddled with unexpected costs as solvent

owners are tapped for money for maintenance and repairs.

6. Check the title: Title companies take care of closing real estate deals in the States but aren’t required

to disclose existing liens. But if you ask they must tell you. You can also use a lawyer, as is the practice

in Canada. Even so, ask the question.

No one believes that the U.S. housing market is down for good, but recovery will be very uneven and slow.

Don’t plan on making a quick buck and prepare for doing far more research and asking many more questions

than you would if buying in Canada.