The Canadian Dollar is in a near free-fall, dropping under $0.69 against the U.S. Dollar, tumbling along with oil prices, which are at a 12-year low. The CAD/USD ratio dipped to levels unseen since April 2003 – the year when Jean Chrétien was Prime Minister, Apple first launched iTunes, and the national average price of a house was under $250,000 (today the national average is $455,000). Depending on Bank of Canada’s next interest rate decision, the Canadian Dollar may tumble even more.
How does the increasing value of the US Dollar against the Canadian Dollar impact Canada? The film industry is probably excited – as Hollywood may shift more productions to Canada. We may see more American tourists swarming the streets of Canadian cities and shops, a reversal of the 2011 southbound cross-border tourism (and shopping trips).
What about the Canadian real estate market?
Though there isn’t a clear (official) picture of foreign investment in the Canadian housing market, real estate professionals were seeing an increase in the number of Canadian properties being acquired by foreign buyers in 2015. Soon we may see a noticeable rise in the number of American real estate investors in Canada, as the US Dollar has gained significant purchasing power in the past year.
Snow bird destinations are more expensive
On the other side of the coin, the drop of the Canadian Dollar has caused real estate prices in the United States to sharply increase for Canadians, hurting their pocket books by 21% more compared to this time last year. In other words, a condo in Florida that last year would have cost $200,000, this winter costs $42,000 more. The same increase is felt in the vacation rental sector as well. Even more bad news is piling up for Canadians, as the loonie also depreciated against most of the local currencies in the Caribbean and Central American countries.
One popular destination remains affordable for Canadians
What’s a snow bird to do? Head over to Mexico, of course! The Canadian Dollar has been holding steady against the Mexican Peso in the past year, and it even appreciated by 5% since January last year.
One of the most popular winter destinations for Canadians, Mexico has been welcoming North American visitors and seasonal residents for a long time now. Vacation homes for sale and for rent located in some of the most desired areas of Mexico are plentiful:
Not all hope is lost for Canadian snow birds after all. Currency market news can look a lot less gloomy from a lounge chair on a warm beach in sunny Mexico.