Palm Springs: The Canadians Aren’t Buying (As Much)
What does the real estate market in Palm Springs, Calif. have to do with the Canadian dollar? A lot, it turns out. I hadn’t really thought about this until I had coffee with a friend the other day. We were talking about how lucky she was to have vacationed in Europe in March/April, as the U.S. dollar hit 10-year highs against the euro. But guess what? Thanks to the strong dollar, my friend now thinks she won’t be able to sell her Palm Springs vacation home for as much as last year.
And she could be right. From about 2012 to early 2014, when the Canadian dollar was worth as much (or more) than the U.S. dollar, and the energy sector up north was booming, Canadians (especially from energy-rich Calgary) flocked to Palm Springs, keeping the local real estate brokers really busy. Now that trend has started to reverse, with the energy sector in a slump and the “loonie” (Canadian dollar) worth 20% less than the greenback.
In March 2015, sales of single-family homes in Palm Springs were down more than 17% from the previous March. That made 18 months in a row that sales were lower than the year before. So it’s not surprising that Zillow now rates Palm Springs, Calif. as a “cold” market with a health index of 6.6 out of 10.
All this is not news for my friend, who’s really in no rush to sell her place in Palm Springs. It’s a wonderful getaway in the dreary winter months and easily rented — exactly why Canadians and others will continue to buy in Palm Springs. At the same time, though, she’s very happy to own several houses in the Seattle area. “Very Hot” is how Zillow.com now rates the Seattle and Bellevue, Wash. markets, with health scores of 8.6 and 9.9, respectively.