Time to Sell for Canadians

Posted by Alex Cortez on Saturday, June 6th, 2015 at 5:31pm.

One of the most common questions we hear from clients are variations of "Is now the time to buy" or "Is now the time to sell". In general, there are a plethora of variables to take into account in order to gauge the viability of a potential sale and its benefits to the seller(s), as each case is as different as the principals conducting them. However, taking most factors into account without going into specific circumstances, for foreign nationals who are seeking to liquidate their Maui real estate, now presents a particularly strong opportunity to sell while currency exchange is favoring the USD. 

Canadians

maui real estate canadians

Due to the (relative) proximity, safety, unique culture and its incredible tropical beauty, Canadians gravitate to Maui - and their investments in real estate have led to Canadians being by far the majority of foreign nationals purchasing on Maui, with particular emphasis on Maui condos. The bulk of those visitors and purchasers are from the Vancouver and Calgary areas, but in the last few years other areas of British Columbia are also showing strong representation. Let's take a look at the chart below which details the exchange rate of USD to CAD over the past 5 years.

maui real estate for canadians

As can be noted, in the past 5 years the USD has generally traded anywhere between 0.95 to 1.05 CAD. However, in the past year, the USD has gained significant strength and of this writing, it is trading for 1.24 CAD. So let us illustrate how the exchange rate is impacting sales:

Actual Example - A client purchased a condominium in Kihei in 2013 for $180K. At the time, the exchange rate was virtually one for one and with an additional $40K in upgrades/renovation, the total cost of acquisition of approximately $220K CAD. As the market has rebounded in the past two years, this client is now able to sell for $320K USD. The equity growth for those 2 years is quite impressive, but when converting to CAD, the profit becomes even more pronounced: $396K CAD (excluding closing costs). 

Purchase: $220K total CAD in mid 2013. Sale $396K CAD in mid 2015. Return on Investment: 80%!

Europeans

Although the number of Europeans purchasing on Maui is comparatively small to that of Canadians, the opportunity to take advantage of the exchange rate is as applicable. Let's take a look at the USD to Euro exchange rate 5 year history.

maui real estate for europeans

Using the same case as an example, at the time of purchase, the total cost of acquisition ($220K USD) would be approximately $160K. Given the current exchange rate, the sale of the subject property would result in $291K EUR.

Purchase: $160K total EUR in mid 2013. Sale $291K EUR in mid 2015. Return on Investment: 82%!

Conclusion

It can be expected that the Maui real estate market will continue to experience increases in values, but what makes it a particularly strong time for foreign nationals to sell is the current exchange rate is so favorable to the USD - at such a rate that is, based on past history, not likely to stand for too long. So although waiting may result is equity growth compared to the current market - speculatively and heavily dependent no micro-market, 10% would be within reason - if the exchange rate returns to a more 'normal' range as evidenced over the past 5 year average, then sellers would net LESS than they would by selling today.

Interested in selling? Then use the form below to contact us or call 808-385-5034 - with our wealth of expertise in representing foreign-national clients, we are poised to assist our clients in achieving their Maui real estate objectives.

Please provide a valid email address.

 

Specializing in Makena and Wailea real estate, Alex Cortez is fully dedicated to representing his clients ethically and diligently. Contact him at 808.385.5034 or Alex@MauiRealEstateSearch.com for more information.

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