Canadians thinking of Vegas as good place to buy

By Brian Wargo (contact)

Monday, March 30, 2009 | 2 a.m.

The drop in home prices has opened the door to more Canadians buying vacation homes and investment property in Las Vegas, and some builders and developers are trying to take advantage of it.

Builders and Realtors are reporting that more Canadians have been shopping for real estate in Las Vegas as a second home, said Dennis Smith, the president of Home Builders Research.

“I think we are getting more Canadians than in the past simply because of the affordability,” Smith said. “I have been talking with some of the sales and marketing people of builders and they tell me more Canadians are looking at properties.”

The reason is that Las Vegas is edging closer to Phoenix in terms of prices of new and existing homes, Smith said.

The median price of resale homes in Las Vegas in February was $145,000, which by Smith’s numbers is down $10,000 from January and $90,000 from February 2008. That contrasts with the $120,000 median resale price in Phoenix.

In the new-home market, the median price was $210,000 in Phoenix and $219,000 in Las Vegas, where the price fell $14,273 or 6 percent from January.

After Arizonans and Californians, Canadians are the third leading group of people buying existing homes in Phoenix, according to Smith.

Canadians have preferred Phoenix over Las Vegas because of the cheaper homes — a trend that started in the early 1990s, Smith said. Phoenix also has the advantages of cheaper golf and better winter weather.

D.R. Horton and other builders in Las Vegas will attend a property show in Edmonton, Alberta, on April 25 that will include Las Vegas real estate, including single-family homes and condominiums, such as Allure, and townhomes. This is the first time Las Vegas properties will be showcased at the Edmonton real estate show, said Dennis Duling, director of investor relations with Equinaire Inc., a California real estate investment firm that matches builders and developers with buyers.

As the housing market remains soft, developers need to more opportunities to make sales, and looking to Canada is a great option, he said.

Canadians are in a better position to invest because their property values have remained steady, and there are no tax benefits in that country to carrying a mortgage. Therefore, their culture is to pay off mortgages as quickly as possible, he said.

When Canadians see a home that once sold for $400,000 and now goes for $200,000, they know it’s the time to buy, Duling said.

“A lot of people believe we are at or near the bottom,” Duling said. “They have been waiting to see where that bottom is.”

Given the colder weather, there is already an incentive for many Canadians to have a home in warmer climates during the winter months, Duling said. The weather and value is a powerful combination to lure them.

“Affordability has put Las Vegas back in the picture,” Duling said. “For a long time, I think, when (Canadians) think of Arizona, they think of desert and warm weather. When they think of Las Vegas, they think of casinos. They forget about the warm weather and desert.”

Arizona has had massive housing development over a much longer time than Southern Nevada, Duling said.

“I think Arizona will always be No. 1 for Canadians because it’s so big and has so many cities, but Vegas could be a strong No. 2 along with Southern California.”

Most of the focus on Canadian buyers is in the Western portion of Canada, where there is more money because of wealth generated by oil, Duling said.

Tom Deinet, a Realtor with Century 21 Barrett, said he’s seeing Canadians hitting the market hard with interest in buying investment properties to rent out. When they are earning 3 or 4 percent interest on their bank accounts, the investors are attracted to buying rental properties with an 8 percent to 18 percent return, he said.

“Properties are selling for half what it would cost to build them,” Deinet said. “You will never see this again.”

A version of this story appeared in this week’s In Business Las Vegas, a sister publication of the Las Vegas Sun.